Is BC5 higher quality than DXT5 NM Compression?

DXT5 is just a slightly better version of DXT1+alpha, which is for color maps. BC5 is specifically for normal maps because it compresses the R and G channels independently of each other and discards the B channel to save file size (since the Z can be derived in the pixel shader).

I do not recommend using anything other than BC5 for normal maps as that is the explicit purpose of the format.

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