THE country’s biggest banks managed to keep a lid on their bad loans in April through strict compliance with prudential banking measures, even as total lending increased nearly 20 percent from a year earlier, data from the central bank showed on Tuesday.
Gross nonperforming loans (NPLs) posted by universal and commercial banks (U/KBs) stood at 2.16 percent of their total loan portfolio (TLP) in April, down from 2.74 percent a year earlier, according to the latest figures released by the Bangko Sentral ng Pilipinas (BSP).
Total loans, meanwhile, rose by 19.2 percent to P4.37 trillion in April from P3.67 trillion in the corresponding month last year.
“The rising TLP and falling NPL have subsequently caused the NPL ratio to decline to 2.16 percent. In comparison, the ratio was 2.74 percent in April 2013,” the BSP said on Tuesday.
The BSP data showed that banks’ loan-loss reserves in April rose to 139.58 percent of their NPLs, up from 128.63 percent in the previous year.
Essential to managing risk
“Keeping NPL levels manageable and loan-loss provisioning are essential to managing credit risks. These measures are also crucial to achieving the BSP’s objective of fostering the stability of the financial system,” the central bank stated.
It said NPL levels remained low across all economic sectors in April. These sectors include financial intermediation, real estate, renting and business activities, manufacturing, and wholesale and retail trade.
“These sectors accounted for 61 percent of the banks’ TLP during the period,” it added.