THE nonperforming loan (NPL) ratio of Philippine banks hit a nine-month high of 3.5 percent in August, Bangko Sentral ng Pilipinas (BSP) data showed.
The credit-risk indicator — which covers past-due loans where the principal or interest is unpaid for 90 days or more after the due date — rose from July’s 3.40 percent but was lower than the year-earlier 3.59 percent.
It was the highest recorded bad-loan ratio since the 3.54 percent seen in November 2024.
Soured loans rose to P550.10 billion in August from P535.45 billion a month earlier and were markedly higher than the yearago P512.70 billion.
Past due loans, meanwhile, picked up to P693.08 billion from P687.59 billion and P631.42 billion, respectively, a month and a year ago. These accounted for 4.41 percent of total loans, up from 4.36 percent in July but slightly lower than the 4.42 percent last year.
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Restructured loans slid to P328.91 billion from P329.64 billion, comprising 2.09 percent — unchanged from July — of banks’ gross loan portfolio.
A year earlier, restructured loans were lower at P293.16 billion.
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Lenders’ loan loss reserves went up to P519.29 billion, equivalent to 3.31 percent of total loans. This was, however, lower than the 3.37 percent a year earlier.
The NPL coverage coverage ratio — a measure of banks’ allowance for potential losses — was slightly higher at 94.40 percent from 94.11 percent a year earlier.
Sought for comment, Rizal Commercial Banking Corp. chief economist Michael Ricafort said the increase in bad loans was likely due to the storms and flooding since July that had affected some borrowers’ ability to pay.
He added that slower global and local growth, “driven by [US President Donald] Trump’s higher tariffs, protectionist measures and trade wars, has weakened exports, investments and jobs,” also leading to a rise in bad loans.
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“These risk factors could be offset by lower BSP rates, which could reduce borrowing costs and would improve their ability to service their loans,” he said.
The central bank’s policymaking Monetary Board cut the benchmark rate by another 25 basis points last Thursday, bringing it down to 4.75 percent.
