By Katherine K. Chan, Reporter
THE PHILIPPINE BANKING system’s gross nonperforming loan (NPL) ratio eased at end-November, preliminary data from the Bangko Sentral ng Pilipinas (BSP) showed.
Philippine banks’ gross NPL ratio dipped to three.32% as of November 2025 from 3.33% the prior month and from the three.54% seen in the identical month in 2024.
This was the bottom bad loan ratio since end-September or when it settled at 3.31%.
Rizal Industrial Banking Corp. Chief Economist Michael L. Ricafort said recent rate cuts helped encourage loan repayments, easing banks’ NPL ratio at end-November.
The important thing policy rate now stands at a three-year low of 4.5% because the central bank has delivered a complete of 200 basis points (bps) in cuts since August 2024.
The BSP also lowered large banks’ reserve requirement ratio (RRR) to five%, which Mr. Ricafort said increased the banking system’s liquidity and lenders’ loanable funds.
“All of those reduced borrowing costs and improved the power to pay by various borrowers, thereby leading to (a) barely lower (and) higher NPL ratio,” he said in a Viber message.
Loans are considered nonperforming once they’re unpaid for a minimum of 90 days after the due date. These are deemed risk assets since borrowers are unlikely to pay.
The quantity of banks’ soured loans edged up by 1.46% month on month to P544.863 billion at end-November from P537.028 billion at end-October. Nonperforming loans climbed by 4.69% from the P520.477 billion in November 2024.
In the primary 11 months, the entire loan portfolio of the banking system reached P16.411 trillion, rising by 1.91% from the P16.104 trillion at end-October and by 11.49% from P14.719 trillion in the identical period in 2024.
Late loans inched up by 1.18% to P695.982 billion as of November from P687.836 billion within the previous month and by 9.52% from P635.478 billion at end-November 2024.
Still, banks’ late loan ratio fell to 4.24% from 4.27% in October and 4.32% a yr ago.
Meanwhile, restructured loans dipped by 0.47% to P331.276 billion in November from P332.823 billion in October. Yr on yr, it grew by 12.79% from P293.702 billion as of November 2024.
This made up 2.02% of the industry’s total loan portfolio, below the two.07% in October but barely higher than the two% recorded a yr prior.
Then again, banks’ loan loss reserves stood at P517.185 billion within the 11-month period, up 1.75% from P508.273 billion a month ago. It likewise rose by 6.6% yr on yr from P485.158 billion.
This brought the late loan ratio to three.15%, easing from 3.16% as of October and three.3% at end-November 2024.
Lenders’ NPL coverage ratio, which gauges the allowance for potential losses on account of bad loans, climbed to 94.92% within the 11 months to November from 94.65% within the previous month and 93.21% as of November 2024.
“The continued double-digit growth in banks’ loans mathematically broadens the loan base that fundamentally reduces the NPL ratio, especially if NPLs are tempered through credit risk management that is healthier aligned with global best practices,” Mr. Ricafort said.
Based on separate BSP data, bank lending posted a gradual growth in November. It expanded by 10.3% yr on yr, matching October’s pace, to P13.988 trillion from P12.676 trillion.