MODEL PORTFOLIO
THE GIST
NEWS AND FEATURES
Global Philippines Fine Living
INSIGHTS
INVESTMENT STRATEGY
Economy Stocks Bonds Currencies
THE BASICS
Investment Tips Explainers Retirement
WEBINARS
2024 Mid-Year Economi Briefing, economic growth in the Philippines
2024 Mid-Year Economic Briefing: Navigating the Easing Cycle
June 21, 2024
Investing with Love
Investing with Love: A Mother’s Guide to Putting Money to Work
May 15, 2024
retirement-ss-3
Investor Series: An Introduction to Estate Planning
September 1, 2023
View All Webinars
DOWNLOADS
economy-ss-9
Economic Updates
Inflation Update: Faster but full-year average within target
DOWNLOAD
948 x 535 px AdobeStock_433552847
Reports
Monthly Economic Update: Waiting on Jay Powell
DOWNLOAD
コンテナターミナル
Economic Updates
Philippines Trade Update: Trade deficit narrows but not a sign of strength
DOWNLOAD
View all Reports
Metrobank.com.ph How To Sign Up
Follow us on our platforms.

How may we help you?

TOP SEARCHES
  • Where to put my investments
  • Reports about the pandemic and economy
  • Metrobank
  • Webinars
  • Economy
TRENDING ARTICLES
  • Investing for Beginners: Following your PATH
  • On government debt thresholds: How much is too much?
  • Philippines Stock Market Outlook for 2022
  • No Relief from Deficit Spending Yet

Login

Access Exclusive Content
Login to Wealth Manager
Visit us at metrobank.com.ph How To Sign Up
Access Exclusive Content Login to Wealth Manager
Search
MODEL PORTFOLIO THE GIST
NEWS AND FEATURES
Global Philippines Fine Living
INSIGHTS
INVESTMENT STRATEGY
Economy Stocks Bonds Currencies
THE BASICS
Investment Tips Explainers Retirement
WEBINARS
2024 Mid-Year Economi Briefing, economic growth in the Philippines
2024 Mid-Year Economic Briefing: Navigating the Easing Cycle
June 21, 2024
Investing with Love
Investing with Love: A Mother’s Guide to Putting Money to Work
May 15, 2024
retirement-ss-3
Investor Series: An Introduction to Estate Planning
September 1, 2023
View All Webinars
DOWNLOADS
economy-ss-9
Economic Updates
Inflation Update: Faster but full-year average within target
September 5, 2025 DOWNLOAD
948 x 535 px AdobeStock_433552847
Reports
Monthly Economic Update: Waiting on Jay Powell
September 2, 2025 DOWNLOAD
コンテナターミナル
Economic Updates
Philippines Trade Update: Trade deficit narrows but not a sign of strength
August 29, 2025 DOWNLOAD
View all Reports
BusinessWorld 3 MIN READ

Bad loans continue to pile up

July 10, 2023By BusinessWorld
Related Articles
DBCC keeps growth targets until 2028 despite external headwinds June 28, 2024 Marcos’ US trip yields USD672M in investment commitments November 21, 2023 Gov’t makes full award of Treasury bond offering February 28, 2023

Philippine banks’ nonperforming loans (NPLs) further increased in May, bringing their NPL ratio to the highest in nine months, central bank data showed.

Data released by the Bangko Sentral ng Pilipinas (BSP) showed the banking industry’s overall NPL ratio rose to 3.46% in May, from 3.41% in April, although lower than the 3.75% a year earlier.

This is the highest NPL ratio since August, when it stood at 3.53%.

Bad loans in May inched up by 1.9% to PHP 436.117 billion from April, and by 1.6% from a year earlier. 

The uptick in the NPL ratio reflects the higher interest rate environment both locally and globally, as central banks hiked aggressively to tame inflation, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

Since May 2022, the Monetary Board raised borrowing costs by 425 basis points (bps), bringing the key interest rate to a near 16-year high of 6.25%. The BSP is widely expected to keep the policy rate steady for the rest of the year.

Aside from higher borrowing costs, firms are also dealing with elevated inflation that has cut into their profit margins and reduced their capacity to repay their loans.

“Nevertheless, the reopening of the economy somewhat overshadowed these risk factors,” Mr. Ricafort said, adding that better revenues, earnings, and employment improved the capability of consumers and firms to pay their loans.

He noted the NPL ratio in June is still among the lowest since the pandemic when it peaked at 4.51% in August 2021.

Based on BSP data, the banking industry’s total loan portfolio expanded by 10.1% to PHP 12.6 trillion from PHP 1.44 trillion in June 2022. Month on month, it inched up by 0.3%.

Past due loans in May rose by 3.3% to PHP 525.511 billion from PHP 508.508 billion a year ago. This brought the ratio to 4.17%, slipping from 4.44% last year.

Restructured loans fell by 7.8% to PHP 310.298 billion from PHP 336.723 billion a year ago. These borrowings made up 2.46% of the industry’s total loan portfolio, down from 2.94% in May 2022.

Lenders continued to beef up their loan loss reserves by 9.2% to PHP 444.028 billion from a year earlier. However, its ratio inched down to 3.52% from 3.55%.

In May, lenders’ NPL coverage ratio — which gauges the allowance for potential losses due to bad loans — increased to 101.81% from 94.76% a year earlier.

Easing inflation and eventually lower interest rates will help improve the credit quality of many borrowers, Mr. Ricafort said. 

Headline inflation slowed for a fifth straight month in June to 5.4% from 6.1% a year ago.

For the first six months of the year, inflation averaged 7.2%, still above the BSP’s 5.4% full-year forecast.

BSP Governor Eli M. Remolona earlier said the Monetary Board may consider cutting interest rates if inflation falls below 4% by October.

The BSP’s next policy-setting meetings are set for August 17, September 21, November 16 and December 14. — Keisha B. Ta-asan

This article originally appeared on bworldonline.com

Read More Articles About:
Worldwide News Philippine News Rates & Bonds Equities Economy Investment Tips Fine Living

You are leaving Metrobank Wealth Insights

Please be aware that the external site policies may differ from our website Terms And Conditions and Privacy Policy. The next site will be opened in a new browser window or tab.

Cancel Proceed
Get in Touch

For inquiries, please call our Metrobank Contact Center at (02) 88-700-700 (domestic toll-free 1-800-1888-5775) or send an e-mail to customercare@metrobank.com.ph

Metrobank is regulated by the Bangko Sentral ng Pilipinas
Website: https://www.bsp.gov.ph

Quick Links
The Gist Webinars Wealth Manager Explainers
Markets
Currencies Rates & Bonds Equities Economy
Wealth
Investment Tips Fine Living Retirement
Portfolio Picks
Bonds Stocks
Others
Contact Us Privacy Statement Terms of Use
© 2025 Metrobank. All rights reserved.

Access this content:

If you are an existing investor, log in first to your Metrobank Wealth Manager account. ​

If you wish to start your wealth journey with us, click the “How To Sign Up” button. ​

Login HOW TO SIGN UP