PH bank defaults rise: Past due loans hit ₱715B amid tightening financial conditions 

While analysts downplay systemic risk, a 12.2% year-on-year climb in missed payments signals growing pressure on Filipino households and SMEs.

Missed loan payments are rising, pointing to early signs of strain among borrowers despite stable headline figures in the banking sector.

Past due loans—accounts that have missed scheduled payments—rose to ₱715.66 billion in February. This is 0.57% higher than ₱711.58 billion in January and 12.21% above the ₱637.81 billion recorded a year ago, suggesting more borrowers are beginning to fall behind.

Banks have set aside ₱519.52 billion in reserves to cover potential losses, slightly higher than the previous month and up 6.12% from a year ago. These provisions cover 93.82% of non-performing loans, a strong buffer despite being lower than earlier levels.

These figures point to tightening financial conditions, with some businesses scaling back and households facing greater strain in meeting monthly obligations.

A normalization of debt

Analysts, however, say the current situation does not signal a broader credit problem. The non-performing loan ratio of 3.33% remains within manageable levels, with banks still well-capitalized.

Instead, the trend is seen as part of a normalization process, as the effects of higher interest rates over the past year continue to work through the system.

Still, with global risks and borrowing costs remaining elevated, repayment pressures could continue to build, keeping banks on alert in the months ahead.

 

 

Missed loan payments in the PH rose to ₱715.66B in February. While banks maintain a 93% NPL coverage ratio, rising defaults signal growing strain for borrowers.

 

 

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