The soured loans of banks operating in the country inched up by 2.7 percent to P460.5 billion in March from P448.4 billion in the same month last year, preliminary data from the Bangko Sentral ng Pilipinas (BSP) showed.
On the other hand, credit growth was faster at 5.8 percent to P11.3 trillion in the first quarter of the year from P10.7 trillion in the same quarter last year.
As a result, the gross non-performing loan (NPL) ratio of Philippine banks improved to a three-month low of 4.08 percent in March from 4.24 percent in February as soured loans slipped with the easing of COVID-19 lockdowns resulting to increased economic activity.
The NPL ratio of banks operating in the country peaked at a 13-year high of 4.51 percent in July and August last year and stayed above four percent between February and November before easing to 3.97 percent in December.
The central bank sees the industry’s NPL ratio peaking at 8.2 percent in 2022, or double the end-2021 level.
With the increase in bad debts, Philippine banks augmented their allowance for credit losses by nine percent to P407 billion from P373.3 billion, translating to a higher NPL coverage ratio of 88.38 percent from 83.24 percent.
According to the BSP, past due loans or loans left unsettled beyond payment date declined by 4.4 percent to P544.6 billion in March from P569.6 billion in the same month last year.
This after the restructured loans jumped by 46.7 percent to P341.8 billion from P232.9 billion to assist borrowers affected by the COVID-19 pandemic.