Philippine banks saw a slight uptick in bad loans in October 2025, as lending growth slipped to a 16-month low on cautious consumer activity.
Data from the Bangko Sentral ng Pilipinas (BSP) showed the gross non-performing loan (NPL) ratio inched up to 3.33 percent in October 2025 from 3.31 percent in September. However, this was lower than the 3.60 percent recorded in October last year.
The value of gross non-performing loans climbed to P537.03 billion in October from P524.31 billion a year earlier. However, it was lower than P538.92 billion posted in September.
Rizal Commercial Banking Corp. (RCBC) chief economist Michael Ricafort said the slight increase in the NPL ratio could be partly due to the recent slowdown in bank lending growth that could have affected base growth.
He said the adverse effects of the onslaught of typhoons and earthquakes in the past months slowed economic activities, while the political noise brought by the flood control mess reduced infrastructure spending that lessened business opportunities. Both of which could have likely reduced borrowers’ ability to pay their loans, he said.
Ricafort said this was offset by lower interest rates that reduced borrowing costs, which in turn, increased demand for loans.
Overall, the banking system’s total loan portfolio decreased to P16.10 trillion in October 2025 from P16.28 trillion in September. Meanwhile, it expanded from P14.55 trillion a year ago.
Past due loans also grew to P687.84 billion from P640.88 billion in the same month last year.
“For the coming months, further Fed and BSP rate cuts would further reduce borrowing costs that would support debt servicing by some borrowers,” said Ricafort.
“Better weather conditions towards the end of 2025 and by early 2026, and the Christmas holiday season could also fundamentally lead to more sales, incomes, livelihood, and other business opportunities that would improve the ability of some borrowers to pay their debts,” he said.
