When you hear that 3.4% of every peso lent in the Philippines is now “dead money,” it sounds extreme — but that’s exactly what the latest banking data shows. As of July 2025, the NPL ratio has ticked up to 3.40%, representing ₱535.4 billion in loans that borrowers failed to pay on time. In simpler terms: these are utang na hindi na bayaran, and they’re becoming a growing concern for banks, borrowers, and the broader economy.
This guide breaks down what non-performing loans are, why they’re rising again, and — most importantly — how Filipino borrowers can protect themselves from becoming part of the statistics.
Under Bangko Sentral ng Pilipinas (BSP) rules, a loan becomes “non-performing” when:
Banks then classify these loans into buckets depending on severity:
Provisioning means banks must set aside money as a buffer — meaning less profit and tighter lending standards.
After peaking at 4.51% in 2021 (pandemic effects), the national NPL ratio steadily dropped to 3.19% in 2023. But by mid-2025, the trend has reversed. The July 2025 figure of 3.40% marks a slow but noticeable climb.
Voice-search friendly question:
“Is the NPL ratio in the Philippines rising?”
Yes — it increased by 0.06 percentage points since June 2025.
If you typically embed charts, you can include the BSP’s line graph here (alt-text: Philippine NPL ratio 2020–2025).
Several stress points are converging:
Credit-card and BNPL loans surged 23% YoY, but this also created more pockets of default — especially among first-time users who overestimated repayment capacity.
Typhoons, rising fertilizer prices, and weaker farm output have caused many agri borrowers to fall behind. SMEs dealing with supply-chain inflation experience similar repayment delays.
With 14% of the workforce still in part-time or unstable gig roles, salary delays lead to missed amortizations.
Borrowers with USD-denominated or FX-linked loans are paying around 8% more compared to 2024 because of currency swings.
This is where it gets personal.
To contain the slow rise in NPLs, regulators have strengthened rules:
Even good borrowers fall behind because of emergencies, job loss, or unpredictable bills. Here’s a practical, PH-focused set of strategies:
Check your ratio using the free BSP/DOF calculator (dof.gov.ph). If loan payments eat more than a third of your income, the risk of default jumps significantly.
High-yield digital banks like Maya (4% p.a.) help grow a safety cushion that protects your loans.
GCash Auto-Debit and bank schedulers reduce missed payments — data shows they cut “forgetfulness defaults” by 35%.
Banks approve 78% of restructuring requests before an account hits NPL status, but only 29% after tagging.
You get one free report every 12 months. Monitoring your file helps you dispute errors before applying for new credit.
Most analysts — including BSP — expect NPLs to stay within 3.2% to 3.5% next year if remittances remain strong and employment stabilizes.
But risks remain:
Summary
Non-performing loans in the Philippines are quietly rising again in 2025, with a 3.40% NPL ratio signaling growing financial pressure on consumers, SMEs, and banks. Even a single missed payment can hurt your credit score, raise future interest rates, and limit access to financing. With underemployment, volatile incomes, and higher borrowing costs, Filipino borrowers need to stay proactive: automate payments, manage debt levels carefully, and request restructuring early. If you’re planning to borrow, platforms like LoanOnline help you compare
