Big banks’ bad loans stay below 2% in September

MANILA, Philippines - The non-performing loans of big banks continued to ease in September last year, falling below two percent for 10 straight months since November 2014, the Bangko Sentral ng Pilipinas (BSP) reported yesterday.

Data from the central bank showed the gross non-performing loans (NPL) ratio of universal and commercial banks eased to 1.82 percent of the banks’ total loan portfolio (TLP) in September from 1.86 percent in August.

The BSP said the latest NPL figures indicate the continued adherence to high credit underwriting standards of universal and commercial banks.

“The said loan quality indicator has been below two percent since November 2014. The latest NPL figures indicate universal and commercial banks’ continued adherence to high credit standards,” the BSP said.

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.

Lending by universal and commercial banks went up slightly to P5.24 trillion in end-September from P5.21 trillion in end-August while banks’ gross NPLs declined 1.8 percent to P95.24 billion from P97.05 billion.

Despite keeping NPL levels low, major banks continued to allocate substantial reserves for potential credit losses at 139.74 percent of gross NPLs in end September from 141.19 percent in end-August.

The BSP said the gross NPLs of big banks also remained manageable across economic sectors as indicated in financial and insurance activities; real estate; manufacturing; wholesale and retail trade; and electricity, gas, steam and air-conditioning supply.