Philippine banks’ bad loans eased in September

MANILA—Better weather conditions in September helped ease the non-performing loan (NPL) ratio of Philippine banks, an economist noted, following disruptions from storms in the previous months.

Preliminary data from the Bangko Sentral ng Pilipinas (BSP) showed the gross NPL ratio dropped to 3.31 percent in September 2025 from 3.50 percent in August. This was also lower than the 3.47 percent recorded in September 2024.

Rizal Commercial Banking Corp. (RCBC) chief economist Michael Ricafort attributed the improvement largely to comparatively better weather conditions in September than in August. He said that weather-related disruptions in August had lessened the number of working days and hampered loan collection activities.

“As a result, NPL ratio eased after the series of storms since July 2025, when there was disruptions also in terms of work, business operations, sales transactions, livelihood, and other opportunities to earn income, ended to pay both principal and interest by borrowers,” Ricafort said.

More working days in September allowed borrowers to earn more and improve their ability to settle their loans, he added.

The value of gross non-performing loans stood at P538.66 billion in September, lower than the P550.1 billion registered in August, but an increase from P517.45 billion a year earlier. NPLs are loans that have not been repaid for 90 days or more.

The banking system’s total loan portfolio expanded to P16.26 trillion in September 2025 from P15.71 trillion in August and P14.90 trillion last year.

Meanwhile, past due loans increased to P676.78 billion in September from P632.87 billion in the same month a year ago.

Ricafort said better weather and economic conditions in some parts of the country for the coming months would help more borrowers improve their ability to pay their debts, although this could be “offset by the strong typhoons, earthquakes and other natural calamities in some parts of the country.”