Rizal Commercial Banking Corp. said on Wednesday that its pre-provision operating profit rose 13.5% to P23.6 billion in the first nine months of 2026, but unaudited consolidated net income came to only P5 billion after the Manila lender kept building reserves against bad loans, according to Daily Tribune and Context.ph reports on the results. Net income was down 39% from P8.18 billion a year earlier, Context.ph reported.

The gap between those two numbers is the story for investors watching Philippine banks. Lenders there are earning more on their loan books than a year ago, helped by fatter margins, yet a rising share of that income is going into provisions as consumer borrowers come under strain. With consumer prices accelerating sharply in October, the question for the sector is how long that drag lasts.

RCBC's margin widened while loan growth slowed

RCBC's core business performed well. Net interest income climbed 15.2% to P47.1 billion, and the net interest margin widened 37 basis points to 5.05%, which the bank put down to steady asset yields and lower funding costs. Consolidated gross income rose 9% to P51 billion.

Costs fell as a share of revenue. The cost-to-income ratio dropped 181 basis points to 53.76%.

Lending, though, cooled. Gross customer loans grew 6.3% to P812.5 billion, which the bank said reflected selective lending and tighter credit underwriting. That compares with 9% loan growth, to P806 billion, that RCBC reported for the first half, when its consumer book had surged 22% to P402.4 billion. Put differently, the loan book grew by only about P6.5 billion between end-June and end-September, based on the two reported totals.

Total resources rose 8.2% to P1.42 trillion and deposits reached P1.07 trillion. The capital adequacy ratio was 13.18% and the common equity Tier 1 ratio 12.30%, both above regulatory minimums, the bank said. At the half year, the capital adequacy ratio had been 13.4%.

The bottom line has been under pressure all year. In July, RCBC reported first-half net income of P4.11 billion, down 22.6% from P5.3 billion a year earlier, and blamed credit impairment provisions taken in response to geopolitical uncertainty. Subtracting the first-half figure from the nine-month total implies third-quarter net income of roughly P890 million, a Capital Times calculation from the reported numbers.

President and Chief Executive Reginaldo Cariaso said the bank wanted to grow "responsibly," and pointed to its payments business and partnerships as sources of longer-term growth. RCBC said it served 7 million customers and 1.6 million credit cardholders.

Provisions are rising across Philippine banks

RCBC is not alone in paying more for credit risk. Bank of the Philippine Islands, with P3.9 trillion of assets at end-September, said in October that nine-month net income fell about 3.2% to P48.9 billion even as total revenue rose 9.8% to P156.3 billion. BPI's provisions for credit losses jumped 69.2% to P19.9 billion, though third-quarter provisioning eased 16.5% from the second quarter. Its nonperforming loan ratio rose quarter on quarter to 2.5%.

BPI's growth also leaned on consumer and small-business credit. Credit card loans rose 27.2% and personal loans 21.7%, while loans to small and medium enterprises surged 46.7%.

Philippine National Bank has gone the other way. PNB reported a 15% rise in nine-month net income to P21.3 billion, from P18.5 billion, as its gross nonperforming loan ratio fell to 4% from 5.2% a year earlier. Its lending is dominated by corporate and commercial loans, which rose 15% to P726 billion, against P66 billion of consumer loans. PNB said its common equity Tier 1 ratio was 19.3%.

The split tracks where stress is building. A Bangko Sentral ng Pilipinas report on the financial system for the first half of 2026, reported by the Daily Tribune on Sunday, showed combined bank net profit up only 5.2% to P208.5 billion. Bad loans across the system rose 10.3% to P585 billion at end-June, although the overall nonperforming loan ratio held at 3.3%.

Consumer loans were the weak spot. Nonperforming consumer loans, including residential mortgages, rose 19.6% to P227.4 billion, with credit card receivables the largest contributor to the increase. The central bank said consumer loan growth had moderated as lenders became more selective, and it described the banking system as having "remained sound and resilient."

What to watch

The fourth quarter will show whether provisions peak or keep climbing. RCBC's slower loan growth suggests management expects more pressure on household borrowers before it eases, and its margin gains give it room to keep setting money aside without slipping into a loss.

For investors comparing the three lenders, the dividing line is the mix of the loan book. Banks with heavier consumer and card exposure, such as RCBC and BPI, have seen provisions eat into earnings, while PNB's corporate-heavy book has delivered higher profit and falling bad-loan ratios. The next number to watch is the size of RCBC's provisions for the quarter, which the reports on Wednesday's results did not disclose.