The ratio of non-performing loans (NPLs) in Philippine banks edged up to 3.40 percent in July 2025 from 3.34 percent in June, data from the Bangko Sentral ng Pilipinas (BSP) showed Friday.
The gross NPL ratio improved from 3.58 percent recorded in July 2024 and remained below the pandemic high of 4.51 percent.
Michael Ricafort, chief economist at Rizal Commercial Banking Corp. (RCBC), attributed the slight increase to slowed local economic growth prospects, indirectly weighed by a similarly slower gross domestic product outlook.
He said this external risk factor would hit exporters and other supply chains both globally and locally.
“The resulting slower economy would lead to lower sales, profits, employment, and other economic activities, thereby reducing the ability to pay by some borrowers to pay their loans,” Ricafort said in a message.
The value of gross non-performing loans rose to P535.45 billion in July from P508.11 billion a year ago.
The banking sector’s total loan portfolio expanded to P15.77 trillion in July from P14.21 trillion last year, but was lower than the P15.88 trillion pesos recorded in June 2025.
Past due loans increased to P687.59 billion in July from P625.71 billion in the same month last year.
NPLs are different from past due loans, as NPLs refer to a borrower’s obligations that have not been repaid for 90 days past their due date.
