Phl banks’ NPLs fall to lowest in 5 years

The non-performing loan (NPL) ratio of Philippine banks improved to 3.08 percent in December 2025, down from 3.32 percent in November, marking the lowest level since August 2020, based on Bangko Sentral ng Pilipinas data.

Rizal Commercial Banking Corporation chief economist Michael Ricafort said the decline in NPLs amid rising bank loans is partly due to a total 200-basis-point reduction in the BSP’s key rates since August 2024. The move was aimed at boosting economic activity and domestic growth.

“(This might likely be) in view of the Christmas holiday spending, in terms of higher sales, incomes, bonuses, livelihood, all of which improved the ability of borrowers to pay their loans/debts,” Ricafort noted.

He added that enhanced credit risk management practices, aligned with global standards, helped slow the growth of bad loans, contributing to the improved NPL ratio.

“Lower banks’ gross NPL ratio could signal improving asset quality, thereby could lead to higher net incomes/profitability, capital, total assets/resources, since banks are among the most profitable businesses/industries in the country for many years,” Ricafort said.