Coverage: Q2 2026 · Information to 25 September 2026
TGB Premium Intelligence · Subscriber Edition
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Published: 25 September 2026 | Region: Asia-Pacific | Country: Philippines | Coverage: Q2 2026 (April–June 2026) | Classification: Premium Intelligence
Desk view — Philippines, Q2 2026
- An oil shock turned the cycle. After cutting to 4.25% on 19 February 2026, the Bangko Sentral ng Pilipinas raised its policy rate on 23 April, 18 June and 27 August, to 5.00%.
- Growth has stalled. Real GDP rose only 2.3% year on year in Q2 2026, after 2.8% in Q1, as investment fell 9.2%.
- Inflation peaked at 7.2% in April and eased to 6.4% in June and 6.1% in August, still above the 2–4% target band.
- Banks earned PHP 208.39 billion in H1 2026, up 5.2%, as net interest income rose 13.1%. Credit-loss provisions rose 32.2%.
- The gross NPL ratio fell to 3.29% in June, but regulatory relief lets affected loans stay out of NPL classification for up to a year, so the ratio understates stress.
Executive summary
The Philippine banking sector went through the second quarter of 2026 in the middle of an energy shock. Conflict in the Middle East pushed up oil and fertiliser prices, the government declared a national energy emergency on 24 March, and headline inflation jumped from 4.1% in March to 7.2% in April. The Bangko Sentral ng Pilipinas (BSP), which had cut its policy rate to 4.25% on 19 February, changed course on 23 April with its first increase in more than two years. Further increases on 18 June and 27 August took the target reverse repurchase rate to 5.00%.
The economy has slowed sharply. GDP grew 2.3% year on year in Q2 2026, down from 2.8% in Q1 and 5.4% in Q2 2025, as gross capital formation fell 9.2% and household consumption grew only 2.8%. In September the Asian Development Bank cut its 2026 growth forecast to 3.3% and S&P Global Ratings to 2.9%.
Bank earnings have held up. The system earned PHP 208.39 billion in the first half, up 5.2%, but provisions rose 32.2% to PHP 111.33 billion and BDO Unibank, Bank of the Philippine Islands (BPI) and Metrobank all reported flat profits. The gross NPL ratio fell to 3.29% at the end of June, yet energy-emergency relief lets banks keep affected loans out of non-performing categories for up to a year. The key question for the next twelve months is how much credit stress that relief is hiding.