Still low, but may signal borrowers ‘early signs of stress’ — analyst
The gross non‑performing loan (NPL) ratio of Philippine banks rose to 3.39 percent in April 2025 from 3.3 percent in March, data released by the Bangko Sentral ng Pilipinas (BSP) on Monday showed.
It was the highest level in five months since the ratio reached 3.54 percent in November 2024.
The April 2025 ratio compares with the year-earlier 3.45 percent.
The NPL ratio measures the percentage of bank loans classified as non‑performing (defaulted or at risk) relative to the total loan portfolio. Loans are tagged non-performing if they are 90 days past due on principal or interest payments, or if full repayment is deemed unlikely.
In absolute terms, NPLs grew 0.6 percent to P519.23 billion in April from P516.12 billion in March, and climbed 8 percent from P480.65 billion in April last year, BSP data showed.
Total industry loan portfolio
The total banking industry loan portfolio contracted 1.9 percent month‑on‑month to P15.34 trillion in April, down from P15.63 trillion in March.
Given the slight contraction, the industry loan portfolio for April remains 10 percent larger compared with P13.94 trillion recorded a year earlier.
A senior research fellow at the Philippine Institute for Development Studies (PIDS) said the NPL increase may be a reflection of ongoing cost-of-living pressures and tighter liquidity.
PIDS’ John Paolo Rivera said this signals “early signs of stress, especially among more vulnerable borrowers, such as MSMEs (micro, small and medium enterprises) and lower‑income consumers.”
While the NPL ratio is still relatively low, Rivera urged banks to remain vigilant.
If the trend continues over the next few months, Rivera said it could indicate that some sectors of the economy are experiencing difficulty servicing debt, possibly due to slower than expected income recovery or tightening liquidity.
“If credit quality deteriorates further, it could prompt more cautious lending behavior and affect the overall pace of credit growth, which in turn could have broader implications for economic recovery and domestic consumption,” he added.
Oikonomia Advisory economist Reinielle Matt Erece pointed to recent elevated unemployment, slower earnings and weak demand–all factors likely weighing on borrowers’ repayment capability
“In addition, slow demand and business growth may also impact business cash flows during the period,” he said.
