Banks' bad loans lowest since Asian crisis
Reuters
First Posted 05:48:00 08/09/2008
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 1997-98 Asian financial crisis, partly due to expanded loan portfolios, the central bank said Friday.
Banks' soured loans edged up 0.6 percent to P96.04 billion at end-May from end-April while their combined loan portfolio climbed 3.0 percent to P2.3 trillion from P2.23 trillion, the central bank said.
Nonperforming assets—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 at end-April and 5.89 percent at end-May last year.
The central bank said commercial banks' outstanding loans climbed 15.4 percent in May from a year earlier, the highest since 1998, when loan demand fell and nonperforming loans climbed because of 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. With editing by INQUIRER.net
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