Banks' bad loans decline in July

MANILA, Philippines (Xinhua) - The non-performing loan (NPL) ratio of major banks in the Philippines eased to 2.11 percent in July from 2.68 percent recorded in the same month last year, the local central bank said today.

Data released by the Philippine central bank showed that gross NPLs in July reached P95.19 billion ($2.12 billion), lower than the P100.81 billion ($2.25 billion) posted in July 2013.

The NPL ratio improved even as local banks' total loan portfolio rose by nearly 20 percent on year to P4.51 trillion ($100.82 billion) during the period.

At the same time, local banks have set aside higher loan loss reserves as compared to the actual level of bad loans, reflecting "the industry's conservative stance in setting buffers against credit risks." The NPL coverage ratio went up to 140.49 percent in July from 131.07 percent in the same period last year.

NPLs are obligations that remain unpaid for at least 30 days after the due date. The NPL ratio pertains to the amount of bad loans over the total loan portfolio.