Bad debt ratio falls to lowest level in 22 months – Manila Bulletin

Banks’ gross non-performing loan (NPL) ratio fell to a 22-month low of 3.57% in July, according to data from Bangko Sentral ng Pilipinas (BSP).

The degraded loan ratio is lower than the same period last year by 4.51% and 3.60% from June this year. The last time the NPL ratio was below 3.60% was in September 2020 at 3.51%. The highest NPL ratio for 2022 was in February at 4.24%.

Money/File (Manila Bulletin article)

NPLs, which are loans past due for more than 90 days, fell 13.7% year-on-year to 420.25 billion pesos from 487 billion pesos in 2021.

Meanwhile, the total loan portfolio during this period increased by 8.97% to 11.77 trillion pesos from 10.80 trillion pesos.

At the end of July, the banks’ NPL coverage rate increased to 99.16% from 82.44% in the same period last year. It is also more than the 97.08% of June.

For loan loss reserves, banks’ loan loss provision rose to 416.73 billion pesos, up 3.79% from 401.50 billion pesos in 2021. loans were also higher than the 409 billion pesos in June.

The bank delinquency rate, which is the delinquency rate, was 4.17% during the period, down from the same period last year of 5.31%, and 4.19% in June.

Loan accounts are considered overdue if they are not paid by the due dates, but banks may provide a 30-day recovery period to allow borrowers to catch up. At the end of July, delinquent loans decreased by 14.38%, from 573.78 billion pesos to 491.29 billion pesos.

Based on the latest banking sector outlook survey for the second half of 2021, the BSP said that most banks expect to have adequate capital, liquidity buffers and large loss reserves. on loans over the next two years.

About 57.3% of banks surveyed said the industry’s NPL ratio is likely to remain above 5% for the next two years. The survey result is below 63.5% at the same time in 2020. About 42.7% of respondents expect an NPL coverage rate between 51% and more than 100%.

The BSP noted mixed projections on restructured loans, with 30.1% of banks surveyed estimating a ratio of restructured loans above 5%. About 23% expect a more conservative restructured loan ratio of 1% to 2% due to banks’ relief measures for their borrowers.

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Sallie R. Loera