Phl banks non-performing loans remain low in 2013

CEBU, Philippines - The Philippine banking system has maintained a low Non-Performing Loan (NPL) ratio, while it posted higher total loan portfolio (TLP) as of October 2013.

Latest official report from the Bangko Sentral Ng Pilipinas (BSP) revealed that the gross NPL ratio of universal and commercial banks stayed low at 2.56 percent of their TPL of P3.93 trillion.

According to BSP, the banks kept their gross NPL ratio low amid a rise of universal and commercial banks’ TPL which grew to P3.93 trillion in October last year from P3.49 trillion in the same period of 2012.

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 posted in the same month in 2012.

Provisioning for NPLs is a prudential measure for mitigating potential credit losses.

Meanwhile, 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 of 2012.

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 the banks’ (universal and commercial) TLP in October.

In a statement, BSP explained that 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 BSP.

Meanwhile, personal remittances from Overseas Filipinos (OFs) rose by 9.5 percent year-on-year in November last year to reach the highest level to date US$2.286 billion. This marks the eight consecutive month in 2013 that personal remittances breached the US$2 billion mark.

On a year-to-date basis, personal remittances from OFs in January-November 2013 grew by 7.1 percent from the previous year’s level to US$22.7 billion.

The steady increase in personal remittances from land-based workers with work contracts of one year or more, accounting for more than three-fourths (75.6 percent) of total transfers for the period.

Transfers from sea-based workers and land-based workers with short-term contracts likewise rose by 8.2 percent.

Other household-to-household transfers comprising largely of cash transfers from Filipinos who have migrated abroad also rose significantly.

Similarly, cash remittances from OFs coursed through banks rose by 7.5 percent year-on-year to US$2.063 billion in November, exceeding the record-high level of US$2.062 billion posted in October.

For the period January to November 2013, cash remittances totaled US$20.6 billion, 6.1 percent higher than the level registered in the same period in 2012.

Cash transfers from both land-based and sea-based workers grew by 5.5 percent and 8.2 percent, respectively.

The major sources of cash remittances were the United States, Saudi Arabia, the United Kingdom, the United Arab Emirates, Singapore, Canada and Japan. —/JOB (FREEMAN)