The non-performing loan (NPL) ratio of the Philippine banking sector declined to 3.27% in December 2024, marking its lowest level for the year, according to data from the Bangko Sentral ng Pilipinas (BSP).
This marks an improvement from 3.36% in November and is the lowest since December 2023’s 3.24%.
Despite the decline in the NPL ratio, the total value of bad loans rose 11.41% year-on-year to ₱500.3 billion ($8.9 billion), reflecting the overall expansion of the banking industry’s loan portfolio. Total loans climbed 10.56% to ₱15.32 trillion, driven by sustained credit demand.
Past due loans—those unpaid beyond their due dates but within the 30-day cure period—rose 10.19% to ₱604.95 billion. However, the past due ratio improved slightly to 3.95%, the lowest since December 2022.
Meanwhile, banks’ loan loss reserves declined, with the NPL coverage ratio slipping to 96.08% from 101.74% a year earlier. Lenders set aside ₱480.7 billion for potential credit losses, up 5.22% from 2023.
Restructured loans, a measure of relief extended to financially strained borrowers, reached ₱310.4 billion, up 2.62% year-on-year, while their share of total loans fell to 2.03% from 2.18%.
The Philippine banking industry has seen its bad loan ratio gradually decline from pandemic-era highs. Between 2015 and 2019, the NPL ratio ranged from 1.7% to 2.5% before spiking to 4.51% at the height of the COVID-19 crisis. The highest NPL ratio on record was 4.99% in March 2008.
