PH BANKS’ NON-PERFORMING LOANS IMPROVE TO 3.08% IN DECEMBER 2025

Philippine banks’ non-performing loan (NPL) ratio improved to 3.08 percent in December 2025 from 3.32 percent in November, marking the lowest level since August 2020, according to Bangko Sentral ng Pilipinas (BSP) data. Economists attributed the improvement partly to a cumulative 200-basis-point reduction in the BSP’s key rates since August 2024, which boosted economic activity, increased consumer spending during the holidays, and strengthened borrowers’ ability to repay loans. Better credit risk management aligned with global best practices also contributed to slower growth in bad loans, improving overall asset quality. The decline in NPLs could enhance bank profitability, capital, and total assets, reinforcing the stability of the domestic banking sector. Analysts view this trend as a positive signal for continued economic growth and financial sector resilience in the Philippines.