The ratio of non-performing loans at Philippine banks rose in July as financial pressures continued to weigh on some borrowers.
The bad-loan ratio increased to 3.35% from 3.29% in June, according to the Bangko Sentral ng Pilipinas. Gross non-performing loans reached P585.08 billion, although the ratio remained below the 3.40% recorded in July 2025.
Industry analysts attributed the month-on-month increase to pockets of financial stress rather than broader weakness in the banking sector.
“The increase in non-performing loans in July reflects pockets of financial stress among some households and businesses after an extended period of high borrowing costs and elevated inflation,” Reyes Tacandong & Co. senior adviser Jonathan Ravelas said.
Ravelas said economic growth remained uneven across sectors, weighing on repayment capacity in some segments.
“At the same time, as bank lending expands, a modest rise in NPLs is a normal part of the credit cycle. The good news is that this does not point to a systemic banking issue,” he said, adding that commercial banks remain adequately capitalized and provisioned.
“Moving forward, the key will be continued economic growth, easing inflation, lower interest rates, and prudent credit risk management to help improve borrowers’ debt-servicing capacity,” Ravelas said.
