PHILIPPINE banks remained in good shape in the first half of the year despite a rise in bad loans, with the Bangko Sentral ng Pilipinas (BSP) citing strong earnings, ample liquidity, adequate capital and stable funding as key buffers.
In its latest Report on the Philippine Financial System for the First Semester of 2026, the BSP said Philippine banks recorded a 5.2-percent growth in net profit from January to June to P208.5 billion.
Total assets grew 10.3 percent to P31.1 trillion, while investments jumped 8.4 percent to P9.1 trillion.
Total bank capital also increased 5.3 percent to P3.7 trillion, on the back of a 13.5-percent increase in retained earnings.
Loans, which remained the main driver of expansion, grew 11.9 percent to P17.8 trillion. This was faster than deposit growth, with deposits rising 8.3 percent to P22.4 trillion.
Still, nonperforming loans (NPLs) across the banking system rose 10.3 percent to P585 billion as of end-June, with the increase concentrated in selected portfolios and warranting closer monitoring, the BSP said.
Despite the increase in bad loans, the overall NPL ratio remained at 3.3 percent, while banks continued to build provisions against potential credit losses.
Allowances
Allowances for credit losses rose 7 percent to P541.2 billion, bringing the NPL coverage ratio to 92.5 percent from 95.4 percent last year.
“Banks continued to build reserves, reflecting forward-looking provisioning frameworks and portfolio-specific risk assessments,” the report read.
“Coverage was particularly strong in selected unsecured consumer portfolios, indicating continued reserve buffers for higher-risk retail exposures. Along with continued profitability, these provisions support banks’ capacity to manage potential losses while sustaining financial intermediation,” it added.
For his part, BSP Governor Eli Remolona Jr. said the Philippine banking system “remains in a strong position to provide funding to Filipino households and firms.”
“As financial services become more digital and accessible, the BSP will continue to promote both financial stability and financial inclusion. We will continue to support innovation while ensuring that strong governance, sound risk management, and operational resilience remain in place,” he said. (Nyah Genelle C. De Leon © Philippine Daily Inquirer)
