The non-performing loan (NPL) ratio of Philippine banks reached an eight-month high in April, according to a report by Philstar Biz . The ratio rose as bad loans increased at a faster pace than overall lending growth, reflecting lingering effects of elevated borrowing costs on some households and businesses.
The rise in NPLs suggests that higher interest rates, which the Bangko Sentral ng Pilipinas kept elevated to curb inflation, continue to strain borrowers’ repayment capacity. Industries such as retail and manufacturing have been particularly affected, though the banking system remains adequately capitalized overall.
Analysts noted that while the NPL increase is a concern, the ratio is still below the pandemic-era peaks. They expect the central bank to monitor credit quality closely as it considers possible rate cuts later in the year, which could ease pressure on borrowers and stabilize asset quality.