Banks’ non-performing loans (NPL) ratio dropped to 4.08 percent as of end first quarter, its lowest since December 2021, based on Bangko Sentral ng Pilipinas (BSP) data.

The soured loans ratio in March was lower from end-February’s 4.24 percent and from 4.21 percent same period in 2021.

NPLs are unpaid loans for more than 90 days and are considered impaired loan accounts. The NPLs on a year-on-year basis slightly increased by 2.67 percent to P460.46 billion from P448.44 billion, but lower by 2.58 percent from end-February’s P472.66 billion.

The industry’s total loan portfolio in the first quarter was up by 5.82 percent to P11.28 trillion versus P10.66 trillion same time in 2021.

Meantime, banks’ past due ratio which is the delinquency rate also fell to 4.83 percent in March compared to five percent in end-February, and 5.34 percent same period in 2021.

Banks’ past due loans decreased by 4.39 percent to P544.59 billion versus P569.64 billion last year. It was also down from P557.96 billion in end-February. Loan accounts are considered past due if unpaid on due dates but banks may provide a cure period within 30 days to allow borrowers to catch up.

Based on BSP data, the industry’s NPL coverage ratio stood at 88.38 percent. This was higher compared to end-February’s 86.12 percent and from March 2021’s 83.24 percent.

Banks’ allowance for credit losses grew by nine percent to P406.97 billion versus P373.28 billion in 2021. Provision for credit losses have risen since 2020 to cover for loan losses due to the extended pandemic lockdowns and as a result of the two Bayanihan laws.

The 45 commercial and universal banks accounted for the lion’s share of the banking systems’ capital with 92-95 percent.

As of end-March, big banks’ NPL ratio also improved to 3.73 percent as was reported on Monday, May 16.

Big banks’ NPLs increased to P394.63 billion, up by nine percent from same period last year of P362.04 billion. Compared to end-February’s P405.68 billion, big banks’ gross NPL improved by 2.72 percent, based on BSP data.

The large lenders’ NPL coverage ratio was higher at 92.20 percent versus end-February of 89.72 percent and same period last year of 89.97 percent. The allowance for credit losses were almost unchanged at P363.85 billion from the previous month’s P363.98 billion, but higher from same period last year of P325.73 billion.