Soured loans of the country’s banking sector posted a double-digit increase of 16.7 percent to P461.66 billion in January from P395.46 billion in the same month last year, preliminary data from the Bangko Sentral ng Pilipinas (BSP) show.
This was faster than the 4.9 percent increase in bank lending to P11.14 trillion from P10.62 trillion as the industry recovers from the impact of the COVID-19 pandemic.
As a result, the non-performing loan (NPL) ratio of Philippine banks increased to 4.14 percent in January after easing for four straight months to 3.99 percent in December.
The NPL ratio of Philippine banks stayed above four percent from February to November last year due to uncertainties brought about by the COVID-19 pandemic. It peaked last year at a 13-year high of 4.51 percent in July and August before declining steadily to below four percent in December.
Despite the uptick, the NPL ratio of the banking system is far from the double-digit levels seen during the Asian financial crisis.
The past due loans, referring to all types of loans left unsettled beyond payment date, increased by six percent to P539.42 billion, while restructured loans jumped by 81.8 percent to P356.45 billion.
Provisioning for loan losses increased by 8.5 percent to P402.89 billion, translating to an NPL coverage ratio of 87.27 percent.
The BSP sees the NPL ratio of Philippine banks accelerating and peaking at 8.2 percent for this year.