Soured loans in the country’s big banks remained low in April, shrinking from a year earlier as a percentage of total loan portfolios (TLP), but increasing by nearly P3.5 billion in absolute terms as loan portfolios expanded.
Figures released by the Bangko Sentral ng Pilipinas (BSP) on Wednesday showed that the non-performing loan (NPL) ratio of universal and commercial banks (U/KBs) in April eased to 1.96 percent, down from 2.16 percent a year earlier.
The central bank also noted that banks’ gross NPL ratio in April was practically unchanged from the 1.95 percent recorded in March.
“The loan quality indicator has been below 2 percent since November last year,” it noted.
By absolute amount, however, bad loans rose to P97.87 billion in April from P97.36 billion in March and from the P94.42 billion a year earlier.
Banks’ TLP rose to P5 trillion combined in April from P4.991 trillion in March. The new total also exceeded the P4.374 trillion recorded in April 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.
In April, the industry provisioned 138.99 percent of its gross NPLs to cover potential losses, which was higher than the 138.19 percent in the preceding month but lower than the 139.58 percent registered a year earlier.
Gross NPLs across economic sectors remained manageable and were seen in financial financial and insurance activities; real estate; manufacturing; wholesale and retail trade; and electricity, gas, steam and air-conditioning supply, which accounted for 68.8 percent of the industry’s TLP in April, the central bank said.
“The Bangko Sentral ng Pilipinas monitors the loan quality of the universal and commercial banks industry as it remains vigilant in ensuring the soundness of the banking system, in line with the broader objective of promoting financial stability,” the BSP stated.
Thrift banks’ NPLs fall in Q1
In a separate report, the BSP said bad loans held by the country’s thrift banks fell in the first quarter of 2015 from a year earlier despite their increased lending.
According to BSP data, the gross NPL of thrift banks stood at P27.29 billion at end-March, representing 4.54 percent of the banks’ TLP during the period. This compares with an NPL ratio of 4.94 percent in the same period in 2014.
Thrift banks’ TLP rose to P600.98 billion at end-March from P547.79 billion in the first quarter of 2014.
Even as their bad loans ratio dropped, thrift banks increased their loan-loss reserves to 74.96 percent as of end-March from 69.37 percent a year earlier.
“This is a welcome trend since setting aside reserves for potential credit losses is a prudential measure for mitigating credit risk,” the BSP said.