The local banking system continued to show consistency in the quality of their assets and loans, as their nonperforming loans (NPLs) remained low at the end of April.
In a report released on Wednesday, the Bangko Sentral ng Pilipinas (BSP) said the gross NPLs of universal and commercial banks represented only 1.96 percent of banks’ total loan portfolio in end-April.
NPLs are also popularly known as “bad” or “soured” loans, as these are the loans that borrowers have not repaid for more than 90 days after their original due date.
A lower NPL ratio is favorable, as it means that a bank is less susceptible to loan-quality erosion and most of its loan assets are healthy, with only a small percentage of bad loans.
The April print was practically unchanged, although a tad higher than the previous month’s 1.95 percent.
The loan-quality indicator has been below 2 percent since November last year.
In absolute terms, NPLs increased, mirroring the increase in the volume of total loan portfolio of big banks during the period. In particular, the gross NPLs for the period was at P97.87 billion out of the total P5-trillion loans during the period.
Both of these indicators were higher in April compared to the gross NPL in March at P97.36 billion, with the total loan portfolio at P4.99 trillion.
“Across economic sectors, the NPL ratio also remained manageable. This was seen in financial and insurance activities; real estate; manufacturing; wholesale and retail trade; and electricity, gas, steam and air-conditioning supply, which accounted for 68.8 percent of the industry’s total loan portfolio in April,” the central bank noted.
Also, for smaller banks, NPL ratio was deemed to be “manageable” by the central bank, although noticably higher from the previous month.
Latest data from the BSP showed that the total NPL of thrift banks stood at 4.54 percent of the total thrift banks’ loan portfolio. Thrift banks recorded a 4.4-percent NPL ratio a quarter earlier.
The banks’ NPL rose by 7.56 percent to P27.29 billion in March from P25.37 billion recorded in end-2014. Meanwhile, the industry’s total loan portfolio grew by 4.33 percent from P576.06 billion posted in end-December last year.
The BSP noted that both banking segments were prudent enough to set aside “substantial” reserves for potential credit losses. The big banks’ reserves cover 139 percent of their gross NPLs in April, while thrift banks’ reserve can cover 74.96 percent of their total NPLs during the period.