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Manila Bulletin devider Business devider Banking & Finance devider Philippine banks' bad loan ratio hits 8-month high in April on higher lending costs

Philippine banks' bad loan ratio hits 8-month high in April on higher lending costs

Published Jun 2, 2026 03:38 pm

At A Glance

  • Philippine banks' bad loan ratio deteriorated to 3.37 percent as of end-April 2026, marking an eight-month high, likely due to the delayed impact of elevated borrowing rates imposed on borrowers.

Philippine banks’ bad loan ratio deteriorated to 3.37 percent as of end-April 2026, marking an eight-month high, likely due to the delayed impact of elevated borrowing rates on borrowers.

The latest Bangko Sentral ng Pilipinas (BSP) data showed that the banking industry’s gross non-performing loan (NPL) ratio widened in April from 3.29 percent in March, 3.33 percent in February, and 3.31 percent in January.

April’s bad loan ratio was the highest since the 3.5 percent recorded in August 2025.

As of end-April, the value of gross NPLs increased by approximately two percent to ₱579.9 billion from ₱568.6 billion in the previous month.

Loans are classified as non-performing if they remain unpaid for at least 90 days past the due date, representing a credit risk as the likelihood of repayment diminishes.

In April, the Philippine banking system’s total loan book contracted slightly to ₱17.2 trillion from ₱17.26 trillion in March.

Past-due loans rose by 3.7 percent to ₱763.6 billion in April from ₱736.2 billion in March. This translated into the past-due ratio deteriorating to 4.44 percent in April from 4.26 percent in the previous month.

Past-due loans refer to accounts where the borrower has failed to pay the principal, interest, or any other amount due on the scheduled date.

Ruben Carlo O. Asuncion, chief economist at Union Bank of the Philippines (UnionBank), said the uptick in the bad loan ratio in April “likely reflects the lagged impact of elevated interest rates on borrowers, alongside normalization in asset quality after the post-pandemic recovery.”

“We expect NPLs to remain broadly stable with a slight upward bias in the near term, before easing as monetary conditions improve,” Asuncion said.

S&P Global Ratings, a global debt watcher, earlier said that Philippine banks could face a potential surge in soured loans as escalating tensions in the Middle East threaten to disrupt the domestic economy.

Related Tags

Loans non-performing loan (NPL) ratio Bangko Sentral ng Pilipinas (BSP) Union Bank of the Philippines (UnionBank)
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