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Philippine bankers expect slower loan growth; consumer-heavy UnionBank reports a 6.56% gross NPL ratio

Published Data as of PhilippinesCreditUnsecured
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Key points

Implications for lenders

With UnionBank's consumer-heavy book showing a 6.56% gross NPL ratio against 3.27% for the system, consumer lenders may face closer funder scrutiny of arrears and loss reserves. As bankers expect slower loan growth, lenders may need to tighten underwriting for new consumer loans and plan collections capacity before provisions rise.

Implications

ExecutivesBanks with consumer-heavy books and coverage below the system level may need to choose between building reserves and protecting reported profit as growth slows.
InvestorsBank-level NPL and coverage gaps are wide; headline profit growth says little about loss buffers without comparing coverage.
OperatorsConsumer lenders can expect bank partners and funders to look more closely at vintage performance and coverage as loan demand softens.

Facts

Outlook: Ana Aboitiz Delgado, president of the Bankers Association of the Philippines (BAP) and president and CEO of UnionBank, said loan growth "will probably be a little bit slower", citing weak demand, according to Philstar (9 November 2026). The banking system's total loans grew 11.4% in September, year on year vs September 2025. 1 The BSP's policy rate is 5.50% after its October increase, up from 5.0%. 2

UnionBank: the same report gives UnionBank's gross NPL ratio as 6.56% 3 and its loan-loss coverage as 75.77%. 4 Consumer loans make up 62% of its loan book. 5 Nine-month net income was PHP 9.9 bn, up 53% year on year. 6

Chinabank: China Banking Corporation's consolidated net income for January–September 2026 was PHP 22.6 bn, up 12% from a year earlier, according to InsiderPH (5 November). 7 Net loans grew 19%, to about PHP 1.2 trn. 8 The NPL ratio was 1.5% with coverage of 102%, 9 and provisions for impairment and credit losses were PHP 1.9 bn. 10

Analysis

Cross-bank comparison of the latest reported ratios (end-September 2026 for most; each bank's own reported ratio): Chinabank 1.5%, BDO 1.60%, Metrobank 1.9%, BPI 2.50% and UnionBank 6.56%, against a banking-system ratio of 3.27%. 11 Coverage runs the other way: BDO 132% and Metrobank 131.8%, Chinabank 102%, BPI 89.6% and UnionBank 75.77%, compared with 94.05% for the system.

The spread tracks loan mix. UnionBank's consumer share is far above that of the corporate-focused lenders, and BSP data show consumer NPL ratios (5.49% in July) well above the system average. 12 A high-yield consumer book can earn more interest but leaves less loss cover per peso of bad loans. With the policy rate higher and bankers expecting weaker demand, lenders with lower coverage have less room before additional provisions cut into profit.

Counterpoints and uncertainties

Bank ratios are taken from press reports of each bank's disclosures and may use different NPL definitions (gross versus net, bank versus group), so the cross-bank comparison is indicative. UnionBank's NPL and coverage ratios are described as improved but without earlier figures or a stated reference date, so the size of the change is not shown. The BAP president's outlook is a qualitative view, not a forecast with a number, and lending could hold up if rates peak sooner than expected.

Key figures

  1. 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)
  2. BSP policy rate after the 22 October 2026 meeting: 5.50% (up from 5.0%). BSP target reverse repurchase (RRP) rate. Philippines, national. Basis date: 22 Oct 2026. Source: Philstar: Inflation risks prompt BSP to hike rates anew (2026-10-22)
  3. UnionBank gross NPL ratio: 6.56% (improved, per the report (no earlier figure given))
    The report describes the ratio as improved but gives neither the earlier figure nor the reference date; it appears alongside nine-month results.
    . Gross non-performing loans / total loans, UnionBank, latest ratio reported with its nine-month 2026 results. UnionBank of the Philippines. Basis date: 30 Sep 2026. Source: Philstar: Bankers see slower loan growth amid weak demand, borrower stress (2026-11-09)
  4. UnionBank NPL coverage: 75.77% (up, per the report (no earlier figure given))
    The report gives neither the earlier figure nor the reference date; it appears alongside nine-month results.
    . Loan-loss allowances / non-performing loans, UnionBank, latest ratio reported with its nine-month 2026 results. UnionBank of the Philippines. Basis date: 30 Sep 2026. Source: Philstar: Bankers see slower loan growth amid weak demand, borrower stress (2026-11-09)
  5. UnionBank consumer loans as share of total loans: 62% (nearly three times the industry average, per the bank). Consumer loans as a share of the total loan portfolio, as reported by the bank. Union Bank of the Philippines. Basis date: 30 Sep 2026. Source: Daily Tribune: UnionBank integrating UnionDigital, UBX amid 53% profit surge (2026-10-25)
  6. UnionBank net income, January–September 2026: PHP 9.9 bn (up 53% year on year). Net income for January–September, as reported by the bank. Union Bank of the Philippines. Basis date: 30 Sep 2026. Source: Philstar: UnionBank to absorb UnionDigital, UBX businesses (2026-10-25)
  7. Chinabank net income, Jan–Sep: PHP 22.6 bn (up 12% from a year earlier). Consolidated net income, China Banking Corporation, first nine months. China Banking Corporation (consolidated). Basis date: 30 Sep 2026. Source: InsiderPH: Chinabank 9-month profit climbs 12% to P22.6B (2026-11-05)
  8. Chinabank net loans growth: 19% (to about PHP 1.2 trn)
    The report gives the growth rate and the total without stating the comparison date; context implies year on year.
    . Growth in net loans, China Banking Corporation, as at September 2026 versus a year earlier. China Banking Corporation (consolidated). Basis date: 30 Sep 2026. Source: InsiderPH: Chinabank 9-month profit climbs 12% to P22.6B (2026-11-05)
  9. Chinabank NPL ratio: 1.5%. Non-performing loans / total loans, China Banking Corporation, as at September 2026. China Banking Corporation (consolidated). Basis date: 30 Sep 2026. Source: InsiderPH: Chinabank 9-month profit climbs 12% to P22.6B (2026-11-05)
  10. Chinabank credit-loss provisions, Jan–Sep: PHP 1.9 bn. Provisions for impairment and credit losses, China Banking Corporation, first nine months. China Banking Corporation (consolidated). Basis date: 30 Sep 2026. Source: InsiderPH: Chinabank 9-month profit climbs 12% to P22.6B (2026-11-05)
  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. Consumer loan NPL ratio: 5.49% (up from 5.44% in June). Non-performing consumer loans as a share of consumer loans (BSP data). Philippine banking system. Basis date: 31 Jul 2026. Source: Inquirer: Bad loans up amid continuing consumer strain (2026-09-09)

Sources

  1. Philstar: Bankers see slower loan growth amid weak demand, borrower stress (2026-11-09)
  2. InsiderPH: Chinabank 9-month profit climbs 12% to P22.6B (2026-11-05)
  3. Daily Tribune: UnionBank to integrate UnionDigital, UBX amid 53% profit surge (2026-10-25)
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A Japanese version of this article is available: 日本語版

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