Banks’ NPL ratio eases to 4.48% in June

Published August 11, 2021, 12:00 AM

by Lee C. Chipongian

For the first time this year, banks’ non-performing loans (NPL) ratio slightly dipped to 4.48 percent in June, cutting off a steadily rising bad loans since January.

The 4.48 percent NPL ratio is still a 12-year high, and the last time NPL ratio was near this level was January 2009 with 4.46 percent, based on Bangko Sentral ng Pilipinas (BSP) data.

The June NPL ratio is slightly lower than May’s 4.49 percent but considerably higher than June 2020’s 2.57 percent. 

Past due ratio, which is the delinquency rate, is also lower in June at 5.36 percent from 5.56 percent in May but higher than 3.53 percent same time in 2020.

NPLs, which are impaired loan accounts and unpaid for more than 30 days, totaled P482.991 billion in June, up 73.86 percent compared to P277.806 billion in June 2020. It is also higher from the previous month’s P479.481 billion NPL.

Banks’ NPL coverage ratio is higher in June at 82.36 percent compared to May of 79.96 percent. The banking sector set aside P397.790 billion of allowance for credit losses in June.

The total loan portfolio in June amounted to P10.775 trillion which was higher than May’s P10.669 trillion. Banks have loan loss reserves against the total loan portfolio stood at 3.69 percent, up from 3.59 percent in May.

Past due loans, in the meantime, amounted to P577.060 billion in June, up by 51.29 percent from same time last year of P381.426 billion. The amount is however lower compared to May’s P593.346 billion.

The NPL and past due ratios first went past four percent and five percent, respectively, in February this year.

BSP Governor Benjamin E. Diokno expects NPL ratio to breach six percent by the end of 2021.

In 2019, NPLs and NPL ratios in pre-pandemic level were steady at the two-percent level until the COVID-19 health issue was declared a global pandemic in 2020. 

The ratio jumped from 2.48 percent in August last year to 3.51 percent by September. By the end of 2020, NPL ratio has climbed to 3.63 percent.