Bad loans ratio dips to 18-month low in June

Published August 8, 2022, 8:10 PM

by Lee C. Chipongian

Banks’ gross non-performing loans (NPL) ratio has dropped to an 18-month low of 3.60 percent in June with improving loan payments by borrowers, based on the latest Bangko Sentral ng Pilipinas’ (BSP) data.

The latest NPL ratio is an improvement from same period in 2021 of 4.48 percent. It is also lower from end-May’s 3.75 percent. The last time the bad loans ratio is at this level was December 2020 at 3.63 percent.

Money/File (Manila Bulletin article)

NPLs, which are unpaid loans for more than 90 days, was down 12.77 percent to P421.31 billion end-June from P482.99 billion same time last year.

The total loan portfolio during this period was P11.71 trillion, up by 8.72 percent from P10.77 trillion in 2021.

Banks’ past due ratio, which is the delinquency rate, also improved to 4.19 percent in June compared to 5.36 percent last year. 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.

The total past due loans declined by 14.97 percent to P490.83 billion from P577 billion same period in 2021.

As of end-June, banks’ allowance for credit losses amounted to P409 billion with the NPL coverage ratio at 97.08 percent. This was higher than same period last year of P397.79 billion and 82.36 percent in 2021.

More than 90 percent of the banking system’s total resources is controlled by the large universal and commercial banks.