BSP says unsecured consumer loans show strain as earlier vintages mature; consumer NPLs up 19.6%

Implications for lenders

With consumer NPLs up 19.6% and a credit card NPL ratio of 5.3%, lenders may need to track repayment by origination cohort rather than only portfolio-wide arrears. Tightening limits for borrowers from earlier high-growth vintages and setting aside provisions early can reduce the risk of sudden losses.

Implications

Facts

The Bangko Sentral ng Pilipinas (BSP) published its Report on the Philippine Financial System for the first semester of 2026, covered by The Manila Times on 7 November. As reported by SunStar and the Daily Tribune, the report says asset-quality pressure was more visible in certain unsecured consumer loan portfolios as loans extended during earlier periods of rapid credit growth matured, and that the pressure was concentrated in specific segments rather than across the whole loan book.

Consumer non-performing loans, including residential real estate loans, were PHP 227.4bn at end-June, up PHP 37.3bn from a year earlier, a rise of 19.6%. ¹ Credit cards contributed most to the increase, while residential real estate loans made up the largest share of consumer NPLs. The NPL ratio was 5.3% for credit card receivables ² and 6.2% for residential real estate loans. ³ Coverage of non-performing card receivables by loss allowances was 105%. ⁴

For the banking system as a whole, the NPL ratio was 3.3%, steady, as reported in the BSP first-semester report. ⁵ The NPL coverage ratio was 92.5%, down from 95.4% in 2025. ⁶ The BSP said banks remained well capitalised and liquid, and that they responded with more selective underwriting, closer portfolio monitoring and stronger collection and recovery efforts; consumer loan growth had moderated.

Analysis

Time series: monthly BSP data published since the report's end-June cut-off point the same way. The credit card NPL ratio was 5.34% in July and the overall consumer NPL ratio 5.49%. System coverage recovered from 92.5% at end-June to 94.05% in September, and the system NPL ratio was 3.27% in September. So banks have rebuilt some buffers since mid-year, while card asset quality has not improved.

Cross-country: Indonesia's gross bank NPL ratio was 2.07% in September, lower than the Philippines' system ratio. In the Philippines the consumer book is where the vintage effect shows: a consumer NPL stock growing 19.6% while salary-based loan growth quickened to 17.5% in September suggests newer cohorts are still being added faster than the older ones are cleaned up.

Counterpoints and uncertainties

The figures are end-June, before the latest monthly data, and the report does not break down which card or consumer cohorts drive the rise. The BSP calls the pressure contained and the system NPL ratio was steady, and coverage rose again by September, so the strain may stay limited to particular portfolios. Residential real estate NPLs are included in the consumer total, so the increase is not only an unsecured-credit story.