MANILA, Philippines - The bad loans ratio of universal and commercial banks continued to improve in August, indicating the high loan quality held by banks.
Bangko Sentral ng Pilipinas (BSP) data showed the gross non-performing loan (NPL) ratio of big banks slid to 2.67 percent in August from 3.05 percent in the same month last year.
“The banks’ NPL ratio remained low as the (universal and commercial banks) kept soured loans in check amid record high lending,” the central bank stressed.
NPLs pertain to obligations that remain unpaid for at least 30 days after due date. The NPL ratio, meanwhile, is the amount of soured loans over the total loan portfolio.
Central bank data showed big banks’ NPLs dipped to P101.93 billion in August from P104.17 billion in the same month in 2012, while their total loan portfolio hit a record high of P3.818 trillion from P3.412 trillion a year ago.
At the same time, the banks’ loan loss reserves further increased in August, showing they have enough to cover for bad loans.
The BSP said the NPL coverage ratio of big banks climbed to 129.13 percent in August from 124.21 percent a year ago.
“[Universal and commercial banks] posted low or declining NPL levels across economic sectors. This was apparent in the financial intermediation, real estate, manufacturing and wholesale and retail trade sectors which together obtained 62 percent of the banks’ [total loan portfolio] in August,” the BSP said.
“The latest NPL figures enabled the U/KBs to maintain high loan quality. This is essential to keeping the viability of individual banks and to maintaining the stability of the domestic banking system,” the central bank continued.
Meanwhile, a separate BSP statement said consumer loans held by universal, commercial and thrift banks rose in June, on the back of continued rosy outlook on the economy.
Housing, auto and credit card loans grew 15.9 percent to P680.4 billion in June from P587 billion a year ago, the central bank data said.
“Residential real estate, auto, credit card and other [consumer loans] rose in June amid the upbeat consumer view of the property market and the opening of classes,” the BSP said.
Despite the rise, the central bank pointed out the ratio of soured loans only made up 6.1 percent of the total consumer loans from 6.7 percent last year.
Moreover, the banks have enough loan loss reserves to cover any unforeseen losses at 69.4 percent in June.