- Bad loans among Filipino consumers rose by nearly a fifth in the first half of 2026, as credit card borrowing continued to expand and repayment pressures became more visible in selected household lending segments.
- Consumer non-performing loans (NPLs), including residential real estate loans, increased by 19.6% year on year to ₱227.4 billion as of end-June, according to the Bangko Sentral ng Pilipinas (BSP). The increase amounted to ₱37.3 billion compared with the same period last year.
- Credit card receivables contributed the largest amount to the increase in consumer bad loans, while residential real estate loans made up the biggest share of the consumer NPL portfolio.
Bad loans among Filipino consumers rose by nearly a fifth in the first half of 2026, as credit card borrowing continued to expand and repayment pressures became more visible in selected household lending segments.
Consumer non-performing loans (NPLs), including residential real estate loans, increased by 19.6% year on year to ₱227.4 billion as of end-June, according to the Bangko Sentral ng Pilipinas (BSP). The increase amounted to ₱37.3 billion compared with the same period last year.
Credit card receivables contributed the largest amount to the increase in consumer bad loans, while residential real estate loans made up the biggest share of the consumer NPL portfolio.
The rise came alongside continued growth in credit card borrowing. Outstanding credit card receivables expanded by 25.3% to ₱263 billion, reflecting sustained demand for unsecured consumer credit.
However, the quality of these loans varied by lending segment. Credit card receivables recorded an NPL ratio of 5.3%, while residential real estate loans posted a higher rate of 6.2%.
Banks tighten lending and collection efforts
The BSP said asset quality pressures were more evident in certain unsecured consumer loan portfolios as loans issued during earlier periods of rapid credit expansion matured.
In response, banks have become more selective in approving loans, strengthened their credit assessments, and stepped up borrower monitoring and collection efforts.
Still, the central bank said the deterioration remained concentrated in specific lending segments rather than affecting the banking system as a whole.
Total NPLs across the banking industry increased by 10.3% to ₱585 billion as of end-June. Despite the increase, the overall NPL ratio remained unchanged at 3.3%.
Banks also raised their allowances for credit losses by 7% to ₱541.2 billion to prepare for potential defaults. However, the system-wide NPL coverage ratio eased to 92.5% from 95.4% in 2025.
Coverage ratios for credit card receivables and other consumer loans stood at 105% and 126.5%, respectively, indicating that banks maintained provisions exceeding the reported bad loans in these categories.
Banks remain profitable despite rising bad loans
The increase in problem loans did not prevent Philippine banks from recording higher earnings during the first half of the year.
Net income across the banking system rose by 5.2% to ₱208.5 billion, while interest income increased by 8.8% to ₱871.6 billion, supported by continued lending activity.
Credit card income grew by 23.5% to ₱96.1 billion. Earnings from other consumer loans recorded an even faster increase, climbing by 67% to ₱21.8 billion.
The BSP said the banking system remained sound and resilient, backed by adequate capital, liquidity, and profitability.
Nevertheless, the growing volume of consumer bad loans highlights the need for banks to assess borrowers' ability to repay and manage credit risks carefully. For consumers, it is also a reminder to keep borrowing within a manageable budget, particularly as credit card balances and other loan obligations accumulate.