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Philippine banks' nine-month profit rises 4.25% as credit-loss provisions grow 24.8%

Published Data as of PhilippinesCredit
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Key points

Implications for lenders

With system provisions up 24.8% against profit growth of 4.25%, lenders may need to price consumer and small-business loans for higher expected credit costs. Banks building buffers may also become more selective in wholesale funding to non-bank lenders, so funding terms can tighten even before NPL ratios rise.

Implications

ExecutivesHigher credit costs are now a system-wide pattern, so pricing for consumer products may need to reflect provisioning more fully.
InvestorsProfit growth relies on net interest income while provisions rise faster; watch fourth-quarter provisions after the October rate hike.
OperatorsEarly-warning and collections capacity matter more as banks build provisions; review roll rates on recent consumer vintages.

Facts

Preliminary Bangko Sentral ng Pilipinas data reported on 2–3 November show the banking system's net income was PHP 315.47 bn in the first nine months of 2026, up from PHP 302.62 bn a year earlier, 1 a rise of 4.25%. 2

Net interest income was PHP 979.09 bn, up 13.5% from PHP 862.44 bn a year earlier. 3 Non-interest income was PHP 178.09 bn, down 5% from PHP 187.39 bn a year earlier, 4 with the foreign-exchange result at a loss of PHP 35.87 bn, against a gain of PHP 9.06 bn a year earlier. 5 Non-interest expenses were PHP 638.46 bn, up 9.8% year on year. 6

Provisions for credit losses were PHP 168.69 bn, up from PHP 135.16 bn a year earlier, an increase of 24.8%. 7 Total loans were up 11.4% year on year at end-September. 8

Analysis

Provisions are taking a larger bite out of income. On T&S calculation, credit-loss provisions equalled 14.6% of net interest and non-interest income in January–September, up from 12.9% a year earlier. 9 Loan growth of 11.4% lifted interest income, but most of that gain was absorbed by higher provisions and expenses and by the foreign-exchange loss.

The system data match the pattern at individual banks: BPI reported nine-month provisions up 69.2%. 10 The banks' NPL ratio was 3.27% in September, down from 3.35% in August and 3.31% in September 2025, 11 so the rise in provisions may reflect banks building buffers for consumer loan growth and a weaker outlook as well as recognised bad loans.

Cross-country: Malaysian banks report a gross impaired loans ratio of 1.4% with loan loss coverage of 126.0%. 12 Philippine banks are provisioning in a market with higher inflation, at 7.2% in September, and a policy rate raised to 5.50% in October.

Counterpoints and uncertainties

The data are preliminary and may be revised. Provisions can rise because banks build forward-looking buffers rather than because losses have materialised, and the NPL ratio eased in September. Part of the profit squeeze comes from foreign-exchange results, which can reverse with the peso.

Key figures

  1. Banking system net income, January–September (BSP): PHP 315.47 bn (up from PHP 302.62 bn a year earlier). Net income of the banking system, January–September, preliminary BSP data. Philippine banking system. Basis date: 30 Sep 2026. Source: Philstar: Philippine banks keep profit streak in 9 months (2026-11-03, BSP data)
  2. Banking system net income growth, January–September (BSP): 4.25% (year on year). Year-on-year change in banking-system net income, January–September. Philippine banking system. Basis date: 30 Sep 2026. Source: Astig.ph: Philippine banks set a record P31.6-trillion balance sheet (2026-11-02, preliminary BSP data)
  3. Banking system net interest income, January–September (BSP): PHP 979.09 bn (up 13.5% from PHP 862.44 bn a year earlier). Net interest income of the banking system, January–September. Philippine banking system. Basis date: 30 Sep 2026. Source: Philstar: Philippine banks keep profit streak in 9 months (2026-11-03, BSP data)
  4. Banking system non-interest income, January–September (BSP): PHP 178.09 bn (down 5% from PHP 187.39 bn a year earlier). Non-interest income of the banking system, January–September. Philippine banking system. Basis date: 30 Sep 2026. Source: Philstar: Philippine banks keep profit streak in 9 months (2026-11-03, BSP data)
  5. Banking system foreign-exchange result, January–September (BSP): a loss of PHP 35.87 bn (against a gain of PHP 9.06 bn a year earlier). Foreign-exchange result of the banking system, January–September. Philippine banking system. Basis date: 30 Sep 2026. Source: Philstar: Philippine banks keep profit streak in 9 months (2026-11-03, BSP data)
  6. Banking system non-interest expenses, January–September (BSP): PHP 638.46 bn (up 9.8% year on year). Non-interest (operating) expenses of the banking system, January–September. Philippine banking system. Basis date: 30 Sep 2026. Source: Philstar: Philippine banks keep profit streak in 9 months (2026-11-03, BSP data)
  7. Growth in banking system credit-loss provisions, January–September (BSP): 24.8% (year on year). Year-on-year change in banking-system provisions for credit losses, January–September. Philippine banking system. Basis date: 30 Sep 2026. Source: Philstar: Philippine banks keep profit streak in 9 months (2026-11-03, BSP data)
  8. Total loan portfolio, year-on-year growth (T&S calculation): 11.4% (year on year vs September 2025)
    Preliminary BSP data as reported in the press; BSP may revise them.
    . Year-on-year change in the banking system's total loan portfolio, T&S calculation from reported BSP figures. Philippine banking system. Basis date: 30 Sep 2026. Source: Astig.ph: Bad loans eased to 3.27 percent, but borrowers still owe more than a year ago (2026-10-29, BSP preliminary data)
  9. Credit-loss provisions as a share of operating income (T&S calculation): 14.6% (up from 12.9% a year earlier)
    168.69 / (979.09 + 178.09) for 2026; 135.16 / (862.44 + 187.39) for 2025, from BSP figures reported by Philstar.
    . T&S calculation: provisions for credit losses / (net interest income + non-interest income), January–September. Philippine banking system. Basis date: 30 Sep 2026. Source: Philstar: Philippine banks keep profit streak in 9 months (2026-11-03, BSP data)
  10. Increase in BPI provisions, first nine months of 2026 vs a year earlier: 69.2% (year on year). Year-on-year change in provisions for credit losses, January–September. Bank of the Philippine Islands, consolidated. Basis date: 30 Sep 2026. Source: Insider PH: BPI 9-mo profit dips 3% despite strong lending as provisions surge (2026-10-22)
  11. Banking system NPL ratio: 3.27% (down from 3.35% in August and 3.31% in September 2025)
    Preliminary BSP data as reported in the press; BSP may revise them.
    . Gross non-performing loans as a share of total loans (BSP data). Philippine banking system. Basis date: 30 Sep 2026. Source: The Chronicle: Philippine banks' bad loan ratio eases to 3.27% in September (2026-10-29)
  12. Loan loss coverage ratio (BNM): 126.0% (up from 125.2% in August)
    The September release gives August as 125.2%; the August release had shown 125.1%.
    . Loan loss provisions including regulatory reserves / gross impaired loans, banking system. Malaysia, banking system. Basis date: 30 Sep 2026. Source: Bank Negara Malaysia: Monthly Highlights & Statistics, September 2026 (released 2026-10-30)

Sources

  1. Bangko Sentral ng Pilipinas: Statistics (banking system financial statements)primary
  2. Philstar: Philippine banks keep profit streak in 9 months (2026-11-03)
  3. Astig.ph: Philippine banks set a record P31.6-trillion balance sheet (2026-11-02)
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