THE nonperforming loan (NPL) ratio of Philippine banks remained steady at 3.35 percent in August despite a challenging global environment, data from the Bangko Sentral ng Pilipinas (BSP) showed.
The NPL or bad loan ratio, which covers past-due debts whose principal or interest is unpaid for 90 days or more, was unchanged from July but slipped from the year earlier’s 3.5 percent.
Union Bank chief economist Ruben Carlo Asuncion said the latest figure indicated that asset quality was broadly stable despite the operating environment.
“The lower NPL ratio compared to 3.5 percent a year ago also points to an improvement in asset quality relative to the size of the loan book,” he said.
Soured loans rose to P596.3 billion in August from the month-earlier P585.74 billion. It was also higher than August 2025’s P550.1 billion.
Past-due loans increased to P69.89 billion in August from P742.26 billion and P693.08 billion a month and year earlier, respectively. These accounted for 4.33 percent of total loans, up from 4.24 percent in July but lower than the 4.41 percent in August last year.
Restructured loans, meanwhile, dropped to P340.58 billion from P341.96 billion in July but were higher than the P328.92 billion in August 2025.
This accounted for 1.92 percent of banks’ gross loan portfolio, down from 1.95 percent a month earlier and 2.09 percent a year earlier.
Lenders’ loan loss reserves recorded an uptick of P555.59 billion in August, or 3.1 percent of total loans. This was lower than the 3.31 percent a year earlier.
The NPL coverage ratio — a measure of banks’ allowance for potential losses — fell to 93.17 percent from 94.4 percent.
Asuncion said NPLs were expected to remain manageable in the near term, backed by banks’ strong capital and loan-loss provisioning buffers.
“However, the outlook warrants caution as persistent inflation, the possibility of higher-for-longer interest rates and signs of moderating economic activity could weigh on borrowers’ repayment capacity and lead to some deterioration in asset quality,” he added.
“While current indicators suggest that the banking system remains resilient, risks to the NPL outlook appear tilted slightly to the upside.”
