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Banks' bad loan ratio falls to 5-yr low in Dec.

Manila Bulletin

|

February 13, 2026

Amid improving asset quality, supported by cautious lenders, Philippine banks' bad loan ratio dropped to 3.08 percent in December 2025, hitting its lowest level since August 2020's 2.84 percent.

The latest data from the Bangko Sentral ng Pilipinas (BSP) showed that the banking industry's nonperforming loan (NPL) ratio improved from 3.32 percent in November 2025.

Bad loans in December likewise stood lower than the 2025 peak of 3.5 percent reached in August and lower than December 2024's ratio of 3.27 percent.

As of end-December 2025, NPLs decreased by 3.3 percent to P526.7 billion from P544.9 billion in November. Year-on-year, however, soured loans increased by 5.2 percent from P500.4 billion in December 2024.

Loans become nonperforming if they remain unpaid for at least 90 days past the due date, posing a credit risk as borrowers are less likely to repay.

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