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.