The proportion of non-performing loans (NPLs) of Philippine banks inched up to 3.40 percent in July from 3.34 percent in June, the Bangko Sentral ng Pilipinas (BSP) reported Friday.
The figure, however, remained lower than 3.58 percent recorded in July 2024, with gross NPLs reaching PHP535.4 billion.
John Paolo Rivera, senior research fellow at the Philippine Institute for Development Studies, said the rise reflects delayed effects of tighter credit conditions earlier in the year and a shift toward riskier lending as interest rates eased.
“While falling interest rates generally support repayment capacity, they may also encourage both banks and borrowers to take on more credit risk especially in consumer segments like BNPL and online lending, where delinquencies are rising,” Rivera said.
He added that NPLs may increase slightly in the coming months as banks rebalance portfolios toward consumer lending amid soft labor conditions and high household debt. Stronger provisioning and improved credit risk tools, he noted, can help contain systemic risks.
