The gross non-performing loans (NPL) ratio of Philippine banks dropped to 3.41 percent in November 2023 after rising to 3.44 percent in the previous month.

Bangko Sentral ng Pilipinas (BSP) data show, though that the latest NPL ratio is higher compared to the 3.35 percent registered in the same period in 2022 but lower from October 2023’s 3.44 percent.

NPLs, which are unpaid principal or interest for 30 days or more, have been seesawing for most of last year with borrowers still struggling to make payments before the due date.

Total NPLs or bad loans as of end-November amounted to P454.28 billion, up 11.31 percent from same period in 2022 of P408.097 billion.

Meanwhile, the total industry loan portfolio reached P13.336 trillion, up 9.32 percent from P12.199 trillion same time in 2022.

Banks’ past due ratio or the delinquency rate decreased to 4.22 percent from 4.26 percent in October, but higher than same time last year of 4.04 percent. Total past due loans rose by 14.38 percent to P563.384 billion from P492.528 billion in 2022.

Under the BSP’s rules, loans and other credit accommodations with unpaid principal and interest will be provided with allowance for credit losses based on the number of days of missed payments, which was anywhere from 31 to 90 days, up to 181 days and over.

Banks’ NPL coverage ratio which are loan loss reserves, was at 101.47 percent in November, lower than October’s 102.66 percent. It was however higher from same period in 2022 of 105.73 percent.

Loan loss reserves to NPL ratio is the proportion of loan provisions against probable losses to the total NPLs. To cover for these potential losses, banks set aside P460.952 billion as loan loss provisioning, up by 6.82 percent from same time in 2022 of P431.5 billion.

According to the BSP, banks’ gross restructured loans which are relief measures given to problematic borrowers, totaled P305.81 billion in November, down by 6.69 percent from same time in 2022 of P327.76 billion.

Restructured loans to total gross loan portfolio stood at 2.29 percent, lower than 2.36 percent in October and also from 2.69 percent in 2022.

The BSP in a report said it remains confident that the NPLs of the banking system “will stay manageable” due to banks’ “prudent credit standards and robust risk governance framework.”

The banking sector is the core of the financial system. Based on its current balance sheet, profitable operations, sufficient capital and liquidity buffers, as well as ample provision for probable losses, the central bank said the industry is “stable and strong.”

For the first six months of 2023, banks have invested a total P6.6 trillion of its funds, up 9.2 percent year-on-year. This is to fuel the growth of the financial system by increasing loans and deposits.

The BSP has always said that the domestic financial system is resilient and supportive of the country’s financing needs despite high inflation and tightened monetary policy.