Banks' bad loans lowest since Asian crisis
Reuters
First Posted 17:27:00 08/08/2008
MANILA, Philippines -- Commercial banks' non-performing loans (NPLs) slipped to 4.17 percent of total loans at the end of May, the lowest since the Asian financial crisis in 1998, partly due to expanded loan portfolios.
Banks' soured loans edged up 0.6 percent to P96.04 billion ($2.2 billion) at end-May from April while their total loan portfolio climbed 3.0 percent to P2.3 trillion in May from the previous month's P2.23 trillion, the central bank said on Friday.
Non-performing assets, which are bad loans and real estate foreclosed by banks, made up 5.21 percent of banks' gross assets at end-May, down from 5.33 percent the previous month and 5.89 percent a year earlier.
The central bank said last month commercial banks' outstanding loans climbed 15.4 percent in May from a year earlier, the highest since 1998 when loan demand fell and non-performing loans climbed due to the impact of the Asian financial crisis.
The crisis began in 1997 but the full brunt of loan defaults hit the sector the following year.
Banks' bad loan ratio has improved significantly after the government passed a law that grants incentives such as tax perks to buyers of banks' soured assets.
Bad loans peaked at 18.8 percent in October 2001 following defaults by corporate borrowers as a consequence of the regional financial crisis.
($1 = P44.34)
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