Development Bank's ₱36.2 Billion Non-Performing Loans Signal Deeper Structural Problems
The Development Bank of the Philippines (DBP) is quietly carrying a massive ₱36.21 billion burden in non-performing loans, most granted during the previous administration, raising serious questions about the institution's drift from its core development mandate and creating hidden fiscal risks for Filipino taxpayers.
Documents obtained by Vantage Point reveal that these problematic loans were extended to 442 borrowers during the Duterte years, with individual exposures ranging from one peso to a staggering ₱3.4 billion. This represents far more than a routine banking issue, it signals a fundamental transformation of how our premier development bank operates.
Surface Calm Masks Deeper Problems
On paper, DBP appears healthy. The bank reported ₱7.1 billion in profits for 2024, maintains capital ratios above regulatory requirements, and shows strong liquidity. No depositors are panicking, no regulators are intervening. Yet beneath this stability lies a troubling reality: the bank's ₱36.2 billion in bad loans represents 6.4% of its total loan portfolio, well above industry averages.
The largest non-performing exposure belongs to Premium Megastructures Inc. at ₱3.4 billion, followed by Chua Manuel & Theresa at ₱3.31 billion, and Phoenix Petroleum Philippines Inc., controlled by businessman Dennis Uy, at ₱2.93 billion. These top accounts alone demonstrate how concentrated the risk has become.
Earnings Under Pressure
DBP's annual profit of ₱7 billion provides little cushion against potential losses. If even 15% of these bad loans prove unrecoverable, the bank faces a ₱5.4 billion hit to capital. At 25% loss rates, the impact approaches ₱9 billion, materially weakening the institution's ability to support future development projects across our archipelago.
This matters deeply for our provinces and rural communities. When development banks become focused on managing past mistakes rather than financing future growth, it's the infrastructure projects in Mindanao, the Visayas, and remote areas of Luzon that suffer first.
Mission Drift Toward Retail Lending
Perhaps most concerning is the discovery that many of DBP's largest exposures are to individuals rather than corporations or development projects. This represents a dangerous departure from the bank's charter, which allows individual lending only as an exception for development-related activities.
DBP was created to finance power plants, transport systems, water infrastructure, and productive enterprises, not to serve as a retail bank for personal loans. Individual borrowers cannot be restructured like corporations, lack audited financial statements, and create politically sensitive collection challenges for a government-owned institution.
When billion-peso exposures appear under individual names, it suggests either lending outside the development mandate or corporate borrowing disguised through personal accounts. Neither aligns with sound development banking practices.
Hidden Fiscal Risk
Unlike private banks, DBP's problems ultimately become public problems. The bank is wholly government-owned, meaning any significant capital erosion becomes a contingent liability for Filipino taxpayers. This creates fiscal exposure that never passes through Congress but still lands on the public purse.
Credit stress is easiest to address before it spreads, before capital adequacy trends downward, and before public funds are quietly required to stabilize what appears healthy on the surface. The current moment offers policymakers a window to act before the situation deteriorates further.
Implications for Development Finance
The real cost of DBP's ₱36.2 billion problem is not just the money at risk today, but the institution's diminished capacity to finance tomorrow's development needs. When development banks carry too much of yesterday's risk, they lose the ability to support the infrastructure and productive investments our growing economy requires.
For a country of 7,641 islands with massive infrastructure needs, from rural electrification to inter-island connectivity, having a weakened development bank poses strategic risks. The institution should be building bridges and power grids, not warehousing fragmented retail risk.
This situation demands immediate attention from policymakers. DBP remains operationally viable today, but its narrowing margins for error and drift from its development mandate require urgent course correction. The alternative is watching our premier development bank gradually transform from a nation-building institution into a risk absorption facility, leaving taxpayers to eventually absorb the costs.
The ₱36.21 billion figure is not just about past mistakes, it's about ensuring DBP can fulfill its crucial role in financing the Philippines' continued development across all regions of our diverse archipelago.