Banks’ bad loans near record low
Major Philippine banks’ asset quality improved at the end of August with the level of bad loans dipping to near record lows, data released this week showed.
Non-performing loans (NPL) held by universal and commercial banks declined to the equivalent of 1.86 percent of the sector’s total portfolio, the Bangko Sentral ng Pilipinas (BSP) said in a report.
“Since November 2014, the monthly loan quality indicator has been below 2 percent,” a statement released Thursday showed.
A loan is considered non-performing after a borrower misses a payment by at least 30 days. The bad loan ratio was manageable in August as banks gross NPLs remained practically unchanged amid a marginal month-on-month expansion in total loan portfolio.
Gross NPLs of P97.05 billion in August moved down slightly from the P97.08 billion posted a month earlier. Total loans rose to P5.209 trillion in August from the P5.114 trillion posted in July this year.
While the industry maintained a low NPL ratio, major banks continued to set aside adequate reserves for potential credit losses. At end-August this year, the industry provisioned for 141.19 percent of its gross NPLs. The NPL coverage ratio stood at 140.15 percent a month earlier.
