• Big banks’ July bad loans at P95.2B

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    Up from June, down from yr-ago; loan-loss reserves 140%

    THE gross nonperforming loans (NPLs) of universal and commercial banks (U/KBs) in the Philippines stood at P95.19 billion at end-July, up from June’s total but down by more than 5 percent from the amount recorded a year earlier, the central bank said on Thursday.

    Data released by the Bangko Sentral ng Pilipinas (BSP) showed that big banks’ bad loans in July were 0.42 percent higher than the P94.80 billion in June, but were down by 5.57 percent from the P110.81 billion in July 2013.

    Despite the month-on-month increase in July, the NPL ratio of U/KBs remained stable, the central bank said. According to the BSP data, big banks’ NPLs comprised 2.11 percent of their total loan portfolio (TLP) of P4.51 trillion in July, the same ratio and TLP recorded in June.

    Moreover, the data showed banks’ reserves for potential credit losses continued to exceed their NPLs.

    The industry’s loan-loss reserves represented 140 percent of its NPLs.

    “This indicates the industry’s conservative stance in setting buffers against credit risks,” the BSP said in a statement.

    Meanwhile, the central bank noted that the NPL levels remained low across all economic sectors in July. These sectors include financial intermediation; real estate, renting and business activities; manufacturing; wholesale and retail trade; and electricity, gas and water supply; which together accounted for 71 percent of the industry’s TLP during the period.

    “The BSP continues to assess the loan quality of U/KBs under its supervisory goal of promoting continued adherence to high credit standards. Achievement of this goal is crucial to the BSP’s broader objective of fostering financial stability,” it stated.

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