MANILA, Philippines--Exposure of universal and commercial banks to soured loans eased in January from a year ago in what regulators said was an indication that lending standards remain prudent even amid rising loans extended by these financial institutions.

The Bangko Sentral ng Pilipinas reported Friday that the non-performing loans (NPL) ratio of universal and commercial banks settled at 3.22 percent by the end of January this year, down from 3.82 percent recorded in the same period last year.

On month-on-month terms, however, the latest NPL ratio was up from 2.97 percent recorded as of December 2009.

A closely watched indicator of financial health, NPL ratio is the proportion of bad debts of banks to their total outstanding loans.

According to central bank data, the latest NPL ratio was a result of P83.21 billion worth of bad debts and P2.58 trillion in outstanding loans.

The amount of soured loans went down from P90.84 billion in January 2009. On the other hand, total loan portfolio rose from P2.38 billion.

Monetary officials said the increase in total loan portfolio of banks was a positive news as this reinforced projections that the economy will grow faster this year than last year. They said bank lending should again fuel consumption and investments this year like what it did last year.

The BSP partly credits lending growth, aided by a low interest environment that boosted demand for loans, for helping the economy escape a recession last year.

They said banks continued to adopt prudent lending standards as reflected by the drop in the amount of soured debts despite the rise in total amount of extended loans.

Industry players said that a 10-percent growth in bank lending may be achieved this year, thus helping the economy attain the government's official gross domestic product growth target of between 2.6 and 3.6 percent.

Last year, the economy grew by 0.9 percent.