Philippine bank bad loans reached ₱585.08 billion in July as repayment pressure remained visible among consumers, particularly borrowers with credit-card and motor-vehicle debt.
The banking system’s gross non-performing loan ratio increased to 3.35% in July from 3.29% in June, according to the latest Bangko Sentral ng Pilipinas loan data.
The peso value of non-performing loans was 9.3% higher than the ₱535.45 billion recorded a year earlier, although the July 2026 NPL ratio remained below the 3.40% registered in July 2025.
Non-performing loans generally refer to loans where scheduled payments have remained unpaid for an extended period, commonly 90 days or more.
But the systemwide figure tells only part of the story.
Credit card and car loan delinquencies rise
BSP data show that the NPL ratio for loans to individuals for consumption purposes increased to 5.49% in July from 5.44% in June.
Within that portfolio, the NPL ratio for credit-card receivables rose to 5.34% from 5.28%, while the ratio for motor-vehicle loans increased to 5.51% from 5.49%.
The peso figures show a similar deterioration in these two categories.
Non-performing credit-card receivables increased to about ₱70.11 billion in July from ₱68.86 billion a month earlier. Outstanding credit-card loans also continued to expand, reaching roughly ₱1.31 trillion.
For motor vehicles, bad loans increased to about ₱38.70 billion from ₱38.47 billion, while the total motor-vehicle loan portfolio stood at approximately ₱702.68 billion.
That contrasts with loans used for production or business activity. Their NPL ratio slipped to 3.27% in July from 3.28% in June, according to the same BSP dataset.
The difference suggests the latest deterioration in asset quality is more visible in some forms of household borrowing than in business credit overall.
The headline NPL ratio needs context
The rise in the banking system’s NPL ratio does not mean bad loans suddenly jumped sharply between June and July.
Gross NPLs increased only slightly from ₱584.97 billion in June to ₱585.08 billion in July. At the same time, total outstanding loans declined from about ₱17.78 trillion to ₱17.45 trillion.
Because the NPL ratio measures bad loans as a share of the total loan portfolio, a smaller loan base can push the ratio higher even when the peso amount of bad loans changes very little.
The same effect can be seen in the broader consumer portfolio. Non-performing consumer loans actually edged down to about ₱151.16 billion from ₱151.35 billion in June, but the total consumer loan portfolio fell more sharply to ₱2.75 trillion from ₱2.78 trillion. The resulting NPL ratio therefore increased to 5.49%.
Credit cards and auto loans, however, stand out because the peso amount of their non-performing accounts also increased.
Borrowers are dealing with elevated living costs
IMAGE CREDIT: LANDBANK
The deterioration comes as Filipino households continue to face elevated prices.
The Philippine Statistics Authority reported headline inflation of 6.1% in August, only slightly lower than 6.2% in July. Inflation for the bottom 30% of income households was even higher at 8.2%.
Higher prices can leave households with less disposable income available for monthly loan payments, particularly for revolving credit such as credit cards and fixed obligations such as car amortizations.
Jonathan Ravelas, senior adviser at Reyes Tacandong & Co., said the increase in bad loans reflects pockets of financial stress after a prolonged period of elevated inflation and borrowing costs, while stressing that the numbers do not currently indicate a systemic banking problem.
Banks also continue to maintain significant provisions against possible credit losses. BSP performance data show about ₱540.90 billion in allowances for credit losses against total loans as of July.
For banks and digital lenders expanding consumer credit, however, the July figures provide another indicator to watch. Overall loan quality remains manageable, but credit-card and vehicle-loan repayment trends are showing clearer signs of pressure than the headline banking number alone suggests.
