Philippine banks’ bad loan ratio increased to 3.33 percent as of end-October as a string of typhoons and earthquakes disrupted working days and weakened borrowers’ ability to settle debts.

The latest data from the Bangko Sentral ng Pilipinas (BSP) showed that the banking industry’s non-performing loan (NPL) ratio worsened in October from the 3.31 percent recorded in the previous month.

Despite the uptick, the October bad loan figure remained lower than the 3.5-percent peak seen in August this year. It was also lower than the 3.6 percent posted in the same month last year.

Bad loans inched down by 0.4 percent to ₱537 billion as of end-October from ₱538.9 billion in September. Year-on-year, soured loans increased by 2.4 percent from ₱524.3 billion in October last year.

Loans become non-performing if unpaid for at least 90 days past the due date, posing a credit risk as borrowers are less likely to repay.

Philippine banks’ total loan book slipped by 1.1 percent to ₱16.1 trillion as of end-October from ₱16.28 trillion in the previous month. Year-on-year, the end-October figure rose by 10.7 percent from ₱14.55 trillion a year ago.

Past-due loans increased by 1.5 percent to ₱687.8 billion as of end-October from ₱677.8 billion a month earlier. They also rose by 7.3 percent from ₱640.9 billion in the previous year.

This brought the past-due ratio to 4.27 percent, up from the previous month’s 4.16 percent but still lower than this year’s peak of 4.41 percent in August and the 4.4 percent posted in the same month last year.

Rizal Commercial Banking Corp. (RCBC) chief economist Michael Ricafort said the pickup in the soured loan ratio could be blamed on “slower growth in bank loans in recent months that could have slowed the growth in the base, and the adverse effects of the series of typhoons and earthquakes that slowed down economic activities amid a reduced number of working days.”

Ricafort added that “political noise, especially related to the flood-control anomalies that slowed down infrastructure spending, also reduced opportunities for businesses and industries in the supply chain or value chain of various infrastructure projects.”

He expects, however, that further easing in key borrowing costs by the BSP would lower lending costs, enabling more borrowers to settle their debts.

“Better weather conditions toward the end of 2025 and into early 2026, along with the Christmas holiday season, could also fundamentally drive more sales, income, livelihood, and other business opportunities, which would improve the ability of some borrowers to repay their debts,” the economist said.