Universal, commercial banks post lower bad loans in Sept.

The ratio of bad loans to the total loan portfolio of the country’s universal and commercial banks further dropped to 1.82 percent as of end-September 2015, the Bangko Sentral ng Pilipinas (BSP) reported on Thursday.

BSP data showed that universal and commercial banks’ gross non-performing loans (NPLs) slid to P95.24 billion in September 2015 from P97.05 billion in August 2015 and P96.18 billion in the same month the previous year.

The total loan portfolio, meanwhile, widened last September 2015 to P5.24 trillion from P5.21 trillion in August 2015 and P4.7 trillion in September 2014.

The NPL ratio of universal and commercial banks at the end of the third quarter of 2015 hence improved from the 1.86 percent posted last August and the 2.04 percent registered in the same period in 2014.

The BSP noted that universal and commercial banks’ NPL ratio, an indicator of loan quality, has been lower than 2 percent since November 2014.

The declining NPL ratio as of September 2015 “indicates universal and commercial banks’ continued adherence to high credit standards,” the BSP said.

“Aside from keeping the NPL ratio low, universal and commercial banks continue to set aside substantial reserves as buffer for potential credit losses,” the BSP added.

BSP data showed that at the end of the first nine months, the industry provisioned for 139.74 percent of its gross NPLs, an improvement from the NPL coverage ratio of 141.19 percent as of end-August.

“Universal and commercial banks’ gross NPLs also remained manageable across economic sectors as seen in financial and insurance activities; real estate; manufacturing; wholesale and retail trade; and electricity, gas, steam and air-conditioning supply, which accounted for 69 percent of the banks’ total loan portfolio in September [2015],” the BSP said.