The Philippine banking sector showed signs of further resilience in November 2024, as asset quality improved and the non-performing loan (NPL) ratio dropped to a two-month low of 3.54%, according to preliminary data from the Bangko Sentral ng Pilipinas (BSP).
The decline in the NPL ratio signals a positive shift in the sector, which has seen loan disbursements rise 10.3% to ₱14.72 trillion from January to November 2024.
NPLs, which are unpaid for at least 90 days, signal higher credit risk, though the NPL ratio suggests that banks are managing this risk more effectively.
While bad debts increased to ₱520.53 billion, banks boosted their allowance for credit losses to ₱485.13 billion, resulting in a robust NPL coverage ratio of 93.2%. This indicates strong preparedness to manage potential loan losses.
Loan disbursements surged 10.3% year-on-year in the first eleven months of 2024, signaling strong credit growth in the banking sector. However, restructured loans declined by 4%.
