Big banks’ bad loans stayed low at end-October of 2013 as its gross nonperforming loan (NPL) ratio was recorded at 2.56 percent of their total loan portfolio (TLP), data from the Bangko Sental ng Pilipinas (BSP) showed on Tuesday.
The BSP said that universal and commercial banks (U/KBs) kept their gross NPL ratio low amid a rise in banks’ TLP, which grew to P3.93 trillion in October 2013 from the P3.49 trillion recorded in the same period a year earlier.
The data said that the drop in gross NPL ratio was matched by an increase in the banks’ loan loss reserves for soured loans, which stood at 130.53 percent of NPLs in October 2013, up from the 126.23 percent posted in the same month in 2012.
“Provisioning for NPLs is a prudential measure for mitigating potential credit losses,” the BSP explained. Meanwhile, the monetary authority noted that if all past due loans become NPLs, the gross NPL ratio would still be low at 2.81 percent in October 2013 compared to the 3.22 percent registered during the same month in 2012.
It added that bad debts across all sectors of the economy generally remained low and manageable as seen in financial intermediation, real estate, manufacturing, and wholesale and retail trade which all accounted for 62 percent of U/KBs TLP in October.
“The banks’ low level of bad debts is an indication of the industry’s continuous effort to adhere to prudent lending standards. This is essential to maintaining financial stability, which is a primary objective of the Bangko Sentral ng Pilipinas,” the BSP said.