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October 07, 2022

Bad debts of Philippine banks slip 2.7% to P447B in April

The soured loans of Philippine banks slipped by 2.7 percent to P447.44 billion in April from P463.66 billion in the same month last year amid the sustained rebound from the pandemic-induced recession, according to the Bangko Sentral ng Pilipinas (BSP).

This translated to a lower non-performing loan (NPL) ratio of 3.93 percent in April, its lowest in 15 months of since the 3.72 percent booked in January last year, from 4.08 percent in March.

The industry continues to benefit from the stronger-than-expected gross domestic product (GDP) growth of 8.3 percent in the first quarter of the year amid the gradual easing of COVID-19 restrictions.

As a result, the banking sector’s loan portfolio increased by 6.9 percent to P11.39 trillion from P10.65 trillion.

Statistics showed that the past due loans decreased by 7.8 percent to P529.3 billion from P574.13 billion for a past due ratio of 4.65 percent, while the loans restructured by banks surged by 40.7 percent to P340.5 billion from P242.04 billion for a restructured loan ratio of 2.99 percent.

Philippine banks augmented their allowance for credit losses by 7.3 percent to P405.4 billion in April from P377.81 billion in the same month last year for a higher loan loss reserve level of 3.56 percent.

The central bank sees the NPL ratio of Philippine banks accelerating and peaking at 8.2 percent for this year.

The interest rate liftoff of the BSP’s Monetary Board after it delivered a 25 basis points hike last May 19 to confront rising inflation could dampen lending activities of banks.

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