Banks’ NPL ratio improves in 2014

MANILA, Philippines -Universal and commercial banks improved their bad loan ratio as of December last year versus the same period in 2013, data from the Bangko Sentral ng Pilipinas showed.

The non-performing loan ratio of big bank’s ddclined to 1.81 percent in end-2014 from 2.13 percent in end-2013 as the expansion in their total loan portfolio outpaced the growth in their soured loans.

BSP data showed banks’ total loan portfolio went up 20 percent to P5.118 trillion as of December last year from P4.257 trillion a year ago,while their NPLs increased two percent to P92.61 billion from P90.509 billion.

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

During the period, the universal and commercial banks have set aside enough reserves for any possible losses due to the bad loans they have.

Their loan loss reserves reached 143.12 percent of their gross NPLs as of December, slightly lower than the 144.12 percent a year ago but still more than the amount of NPLs they have incurred.

Provisioning for bad loans is a prudential measure meant to mitigate against any potential credit losses, the central bank has earlier said.  

At the same time, thrift banks also improved their NPL ratio as of December last year, BSP data showed.

These banks cut their bad loan ratio to 4.38 percent from 5.46 percent a year prior amid a decrease in their soured loans and a rise in their total loan portfolios.

Thrift banks reduced their soured loans by nine percent to P25.173 billion from P27.729 billion, while growing their total loan portfolio by 13 percent to P574.633 billion from P508.199 billion.

These lenders also increased their loan loss reserves to 76.98 percent as of December from 72.51 percent in the same period in 2013.

The BSP monitors the soured loans of banks as part of its efforts in promoting high credit standards, essential to keeping the domestic financial system stable.