Soured loans recorded by the country’s big banks remained low in August, the central bank reported on Wednesday, shrinking from a year earlier as a percentage of total loan portfolios (TLP) as well as in absolute terms.
Figures released by the Bangko Sentral ng Pilipinas (BSP) showed the non-performing loan (NPL) ratio of universal and commercial banks (U/KBs) easing to1.86 percent, down from the 2.21 percent recorded a year earlier.
The central bank also noted that the banks’ gross NPL ratio in August was slightly lower than the 1.90 percent seen in July.
“Since November 2014, the monthly loan quality indicator has been below 2 percent,” it noted.
By absolute amount, bad loans eased to P97.05 billion in August from P97.08 billion in July and P101.2 billion a year earlier.
The banks’ TLP rose to a combined P5.208 trillion in August from P5.114 trillion in July. The new total also exceeded the P4.588 trillion recorded in August 2014.
The BSP defines NPLs as past due loans where the principal or interest is unpaid for 30 days or more after the due date, including the outstanding balance of loans payable in monthly installments when three or more installments are in arrears.
Banks provisioned 141.19 percent of gross NPLs to cover potential losses in August, higher than the 140.15 percent in the preceding month and the 133.95 percent registered a year earlier.
Gross NPLs across economic sectors remained manageable and were seen in financial and insurance activities; real estate; manufacturing; wholesale and retail trade; and electricity, gas, steam and air-conditioning supply, which accounted for 68.7 percent of the industry’s TLP in August.
The central bank said the latest loan quality indicators reflected the big banks’ continued adherence to high credit standards.
“The Bangko Sentral ng Pilipinas monitors the quality of U/KBs’ loan portfolio as part of its supervisory efforts to ensure the soundness of the banking system and to promote financial stability,” it said.