Big banks bad loans down at ‘manageable’ level in May


Universal and commercial banks in the Philippines have kept their bad loans manageable in May despite a 20 percent jump in lending over a year earlier, data from the central bank showed on Tuesday.

Gross non-performing loans (NPLs) at the country’s biggest banks stood at P96.07 billion in May, comprising 2.17 percent of their total loan portfolio (TLP) that month. That NPL ratio was down from 2.75 percent in May 2013, according to the latest figures released by the Bangko Sentral ng Pilipinas (BSP).

Total loans in May rose by 20.15 percent to P4.43 trillion from P3.69 trillion in the corresponding month last year.

However, the NPLs have been on the rise for most part of the year so far, contrary to the trend in previous years, the BSP data showed.

The banks’ loan-loss reserves or the NPL coverage ratio in May rose to 138.29 percent of their NPLs, up from 128.50 percent in the previous year.

“Calculated as loan-loss reserves, divided by gross NPLs, the coverage ratio shows that big banks have set aside in reserve an amount that is actually larger than their portfolio of NPLs,” the central bank said.

Withstanding credit shocks
The BSP said banks’ high NPL coverage ratio reflects a conservative stance on the part of the universal and commercial banks and supports their ability to withstand credit shocks.

It said NPL levels remained generally low across all economic sectors in May. These sectors include financial intermediation, real estate, renting and business activities, manufacturing, wholesale and retail trade, and electricity, gas and water supply.

“The BSP monitors the loan quality of all types of banks in line with the efforts to maintain high credit underwriting standards. This is essential to the BSP broader objective of fostering financial stability,” it said.


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