Non-performing loans remain low in August

MANILA, Philippines - Soured loans of major banks slipped in August and remained below two percent for nine straight months since November last year amid the industry’s healthy loan portfolio.

The Bangko Sentral ng Pilipinas (BSP) reported yesterday the ratio between the gross non-performing loans (NPLs) of universal and commercial banks and their total loan portfolio (TLP) remained low at 1.86 percent as of end-August from 1.90 percent as of end July.

The monthly loan quality indicator has been below two percent since November 2014. A loan that is non-performing is in default or close to being in default as the debtor has not made his or her scheduled payments for at least 30 days.

The banks kept their NPL ratio manageable in August as the gross NPLs of universal and commercial banks remained practically unchanged amid a marginal month-on-month expansion in total loan portfolio.

The gross NPLs of big banks moved down slightly to P97.05 billion in August from P97.08 billion in July, while the industry’s total loan portfolio inched up 1.86 percent to P5.21 trillion from P5.11 trillion.

While the industry maintained a low NPL ratio, universal and commercial banks continued to set aside adequate reserves for potential credit losses.

The gross NPLs of major banks also remained manageable across economic sectors as seen in financial and insurance activities; real estate; manufacturing; wholesale and retail trade; and electricity, gas, steam and air-conditioning supply, which accounted for 68.7 percent of the banks’ total loan portfolio in August.

“The latest loan quality indicators reflect the universal and commercial bank’s continued adherence to high credit standards,” the central bank said.

The BSP monitors the quality of the loan portfolio of universal and commercial banks as part of its supervisory efforts to ensure the soundness of the banking system and to promote financial stability.