Filipinos still struggle with debt as bank bad loans rise

Gross non-performing loans climbed to ₱585.08 billion in July even as total overdue loans declined.

Banks’ overdue loans fell in July, but the numbers also show that some Filipinos are still struggling to keep up with their debts.

Bangko Sentral ng Pilipinas data showed overdue loans declined to ₱738.76 billion in July from ₱753.38 billion in June. But loans overdue by more than 90 days, classified as gross non-performing loans, edged up to ₱585.08 billion from ₱584.97 billion.

That pushed the banking industry’s gross NPL ratio to 3.35% from 3.29%, even as total loans fell to ₱17.45 trillion from ₱17.78 trillion.

The pressure also showed up in other measures. Non-performing assets rose to ₱787.34 billion, while distressed assets climbed to ₱999.05 billion, bringing them close to the ₱1-trillion mark.

Reyes Tacandong & Co. senior adviser Jonathan Ravelas said the increase in bad loans points to financial stress among some households and businesses after a prolonged period of high borrowing costs and elevated inflation.

Still, Ravelas said the banking system remains well-capitalized and the risk of a systemic banking problem remains low. Faster economic growth, easing inflation and lower interest rates could help borrowers regain their ability to pay.

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