Bad loans held by Philippine banks edged up in August 2025, with disruptions from a series of typhoons since July affecting borrowers’ ability to repay their obligations.
Data from the Bangko Sentral ng Pilipinas (BSP) showed the gross non-performing loans (NPL) ratio increased to 3.50 percent in August from 3.40 percent in July. However, this was lower than the 3.59 percent recorded in August 2024.
The value of gross non-performing loans climbed to P550.1 billion in August from P512.70 billion a year earlier, and was also higher than the P535.45 billion posted in July.
The increase was largely due to weather-related disruptions brought by typhoons, which lessened the number of working days and reduced the profits of businesses and individuals, according to Rizal Commercial Banking Corp. (RCBC) chief economist Michael Ricafort.
This likely reduced borrowers’ ability to pay their loans, he said.
“This is on top of the slower global and local economic due to Trump’s higher tariffs, protectionist measures and the resulting trade wars that reduced global trade, investments, employment and other business activities, thereby reducing the ability to pay by some borrowers and fundamentally leading to some pick up in NPLs or NPL ratio,” Ricafort said in a Viber message.
Ricafort noted that these risk factors are offset by lower interest rates, with BSP rates at 4.75 percent and Fed rates at 4.25 percent, which reduce the financing costs of various borrowers.
“[This] would improve their ability to service their loans amid possible Fed and BSP rate cuts in the coming months,” he said.
The banking sector’s total loan portfolio expanded to P15.71 trillion in August 2025 from P14.3 trillion in the previous year, but was lower than the P15.77 trillion recorded in July.
Past due loans increased to P693.08 billion in August from P631.42 billion in the same month a year ago.
NPLs refer to loans that have not been repaid by borrowers for 90 days past their due date, which differs from general past due loans.
