By Katherine K. Chan, A reporter
PHILIPPINE BANK system extreme inefficiency non-performing loans (NPL) rate lowered at last-November, prelittle data from Bangko Sentral ng Pilipinas (BSP) is shown.
The total NPL of Philippine banks decreased to 3.32% as of November 2025 from 3.33% in the previous month and from 3.54% seen in the same month in 2024.
This was the lowest bad loan ratio since the end of September when it fell to 3.31%.
Chief Economist Rizal Commercial Banking Corp. Michael L. Ricafort said the recent rate cuts helped encourage loan repayments, lowering the banks’ NPL ratio at the end of November.
The key policy rate now stands at a three-year low of 4.5% as the central bank has brought in a total of 200 basis points (bps) of cuts from August 2024.
The BSP also lowered the central bank’s reserve requirement ratio (RRR) to 5%, Mr. Ricafort said he has increased the banking system.liquidity and creditors’ loans.
“All this reduced the cost of borrowing and improved the ability to pay by different lenders, thus leading themto (a) less (and) better NPL ratio,” he said in a Viber message.
A loan is considered non-performing if it is not paid for at least 90 days after the due date. These are risky assets as borrowers are less likely to repay.
Total bad bank loans increased by 1.46% month-on-month to P544.863 billion at the end of November from P537.028 billion at the end of October. Non-performing loans increased by 4.69% from P520.477 billion in November 2024.
In the first 11 months, the total loans of the banking system reached P16.411 trillion, up 1.91% from P16.104 trillion at the end of October and 11.49% from P14.719 trillion during the same period in 2024.
Outstanding loans increased by 1.18% to P695.982 billion as of November from P687.836 billion last month and by 9.52% from P635.478 billion at the end of November 2024.
However, the bank’s loan-to-value ratio fell to 4.24% from 4.27% in October and 4.32% last year.
Meanwhile, restructured loans decreased by 0.47% to P331.276 billion in November from P332.823 billion in October. Year-on-year, it grew by 12.79% from P293.702 billion as of November 2024.
This made up 2.02% of total loans to the industry, down from 2.07% in October but slightly higher than the 2% recorded last year.
On the other hand, the bank’s loan losses stood at P517.185 billion in the 11-month period, up 1.75% from P508.273 billion last month. It also increased by 6.6% year-on-year from P485.158 billion.
This brought the average mortgage rate down to 3.15%, from 3.16% as of October and 3.3% at the end of November 2024.
Lenders’ NPL coverage ratiowhich measures the allowance for potential losses due to bad loans, rose to 94.92% in the 11 months to November from 94.65% last month and 93.21% from November 2024.
“Continued double-digit growth in bank loans statistically expands the loan base which fundamentally reduces the NPL ratio, especially if NPLs are reduced through credit risk management that is more in line with global best practices,” said Mr. Ricafort.
Based on separate BSP data, bank lending posted steady growth in November. It grew by 10.3% year-on-year, matching the pace of October, to P13.988 trillion from P12.676 trillion.
