Commercial banks in the Philippines set aside record-high loan-loss provisions in the first half of 2026, the highest since data collection began in 2008. The Bangko Sentral ng Pilipinas reported that provisions for loans and financial assets totaled 111.3 billion pesos, up 32 percent from the same period last year. Meanwhile, credit loss reserves rose 7 percent to 541.2 billion pesos. These figures exceed the 106.3 billion pesos set aside during the COVID-19 crisis in the first half of 2020. Despite the significant increase in provisioning, the central bank noted it remains in line with loan portfolio expansion, with the non-performing loan ratio steady at 3.3 percent. Pressure stems from Middle East conflicts that have pushed oil prices and inflation above 6 percent, forcing the central bank to keep interest rates high. This has affected the repayment capacity of households and low-income groups. The Philippine economy grew only 2.8 percent in the first quarter, and the government has lowered this year's growth target to 3.5 to 4.5 percent. Executives at Bank of the Philippine Islands and an economist from Rizal Commercial Banking Corp. acknowledged they have prudently increased provisioning to manage rising risks, particularly in retail loans and credit cards. However, the combined net profit of the commercial banking sector in the first half of 2026 still grew 5.2 percent to 208.4 billion pesos, driven by interest income and asset base expansion.
Bank of the Philippine Islands increased loan-loss provisions, which reduces net profit.
Rizal Commercial Banking Corp. increased provisioning to manage rising risks, impacting earnings.