The Morning View

Philippine banks’ non-performing loans (NPL) ratio fell to 3.08% in December 2025, its lowest level since the 2.84% recorded in August 2020. The decline was driven by banks’ improving asset quality, and reflected cautious lenders. Banks’ total loan book grew to PHP 17.105 trillion (+11.6% YoY), while total NPLs increased at a slower pace to PHP 526.68 billion in December (+5.2% YoY).

Ayala Land, Inc.’s (PSE Ticker: ALI) industrial arm, AyalaLand Logistics Holdings Corp., (ALLHC), joined an investment mission in Taiwan to promote the Philippines as a top investment destination. According to ALLHC, the mission was well-received, with Taiwanese investors expressing interest in the Philippines’ strengths in advanced manufacturing and electronics.

Local equities fell on investors’ profit taking after a two-day rally. The PSEi closed at 6,471.25 (-0.42% DoD).

Local fixed income yields ended mixed as investors assessed the latest US jobs report which showed stronger-than-expected nonfarm payrolls in January and significant downward revisions to job gains in 2025. On average, yields rose by 0.20 bps, with the 2Y closing at 5.19% (+0.29 bps) and the 10Y closing at 5.96% (-0.36 bps).

The Philippine peso slightly strengthened amid optimism over the improvement in the banking sector’s NPL ratio. The USD/PHP pair closed at 58.12 (-0.30% DoD).

Initial jobless claims for the week ended February 7 fell by 5,000 to a seasonally adjusted 227,000 (Consensus: 223,000). The decline was attributed to recent snowstorms and frigid temperatures across the country. Meanwhile, continuing claims grew by 21,000 to 1.86 million as of end-January.

A Reuters poll showed that economists expect the European Central Bank to keep its deposit rate at 2.00% through the end of 2026. As Eurozone inflation slowed to a 16-month low of 1.7% in January, policymakers warn that price growth could slow too much due to slowing wage growth, rising cheap Chinese imports, and a stronger euro.

US equities dropped amid fears that Artificial Intelligence can disrupt certain industries. This was also after Cisco Systems provided an underwhelming earnings guidance for 1Q26. The S&P 500 closed at 6,832.76 (-1.57% DoD), while the DJIA ended at 49,451.98 (-1.34% DoD).

US Treasury yields fell, and the US dollar closed flat as traders positioned ahead of the January US inflation print, which market expects to decelerate to 2.5% YoY (Dec.: 2.7%). 

On average, yields fell by 4.90 bps, with the 2Y closing at 3.46% (-5.60 bps) and the 10Y closing at 4.10% (-7.20 bps).

The DXY closed at 96.93 (+0.09% DoD).

Sources: BusinessWorld, Inquirer, Philippine Star, Manila Bulletin, Businessmirror, PSE Edge, Bloomberg, CNBC, Reuters, CNN, Wall Street Journal, Financial Times, Market Watch

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