Philippine banks’ bad loan ratio rose to a six-month high of 3.33 percent in February 2026 as the lagged impact of high interest rates and early seasonal cash-flow pressure affected the ability of borrowers to pay.
Data from the Bangko Sentral ng Pilipinas (BSP) showed the gross non-performing loan (NPL) ratio was higher than the 3.31 percent recorded in January but lower than the 3.38 percent seen in February 2025.
Total NPLs climbed to P553.68 billion in February from P513.35 billion last year and P550.81 billion in the previous month.
Reyes Tacandong & Co. Senior Adviser Jonathan Ravelas said the slight uptick in NPLs reflected the lagged impact of high interest rates from 2025, early seasonal cash-flow pressure and faster loan growth. He said a bit of slippage under these circumstances is normal at the margin.
“What we’re seeing is less a credit problem and more a normalization story. At around 3.33 percent, NPLs remain very manageable and well below stress levels, with banks still well‑capitalized and properly provisioned,” Ravelas said.
The total loan portfolio of the banking system declined to P16.60 trillion in February from P16.64 trillion in the previous month, but it rose from P15.17 trillion a year ago. Past due loans also grew to P715.66 billion from P637.81 billion in February 2025.
“Bottom line: this is a mild bump, not a red flag—but it reinforces the need for closer credit monitoring if rates stay high longer,” Ravelas said.
