Thrift banks post slight hike in bad loans

MANILA, Philippines - The country’s thrift banks registered a slight increase in their non-performing loans (NPLs) in the first quarter of 2015, the Bangko Sentral ng Pilipinas (BSP) reported yesterday.

Thrift banks’ bad loans reached P27.29 billion in January to March, a 0.85 percent hike from P27.06 billion in the same period in 2014.

NPLs are obligations left unpaid at least 30 days after due date while the NPL ratio is the amount of bad loans against total credit portfolio.

Meanwhile, gross NPLs of thrift banks stood at 4.54 percent of the banks’ total loan portfolio of P600.98 billion at the end of March this year, 4.33 percent more than the P576.06 billion posted in the last quarter of 2014.

“Aside from keeping NPL levels manageable, the industry also maintained substantial reserves for potential credit losses,” BSP said.

By end-March, thrift banks’ allocated loan loss reserves equaled to 74.96 percent of their gross NPLs, lower than the 76.73 percent in the prior quarter but higher than the 69.37 percent recorded in March 2014.

“Despite the quarter-on-quarter decrease in the NPL coverage ratio of thrift banks, this ratio has been generally rising since March 2010. This is a welcome trend since setting aside reserves for potential credit losses is a prudential measure for mitigating credit risk,” the central bank said.

The BSP regularly monitors the loan quality of banks to promote sound credit risk management in order to maintain stability of the financial system.