Delinquent loan ratio hits 3-month high – BSP – Manila Bulletin

Banks’ non-performing loan (NPL) ratio continued to rise to 4.24% in February, its highest level in three months, according to data from Bangko Sentral ng Pilipinas (BSP).

The latest NPL ratio was the highest in three months from November’s 4.35%. The last time the NPL ratio held at this current level was in March last year at 4.21% and March 2009 at 4.23%. It is also higher compared to the same period last year by 4.08% and 4.14% in January this year.

Total NPLs, which are loans past due for more than 30 days and considered impaired loan accounts, rose 9.59 percent to 472.664 billion pesos from 431.266 billion pesos in 2021.

The banking sector’s total loan portfolio in February stood at 11.15 trillion pesos, up 5.39 percent from the same period last year of 10.579 trillion pesos.

At the same time, the bank arrears rate, which is the default rate, is lower in February at 5% compared to 5.21% in the previous year, but is higher than 4.84% of January.

Total delinquent loans rose to 557.964 billion pesos, up 1.18% from 551.472 billion pesos in the same period of 2021.

Based on BSP data, the sector’s NPL coverage rate stood at 86.12%. This figure is lower than that of January by 87.27% and the same period last year by 86.64%.

Banks’ provision for credit losses increased by 8.94% to P407.035 billion from P373.631 billion in 2021. the pandemic and following the two Bayanihan laws.

The BSP considers the banking system’s loan portfolio to be manageable. Banks also continued to report profits. In 2021, the combined net income of the banking system increased by 44.8% year-on-year to reach 224.8 billion pesos.

Meanwhile, banks’ return on assets last year was 1.1%, down from 0.8% in 2020. Return on equity also improved to 9% from 6.5% previously. Cost to revenue was 58.7% and has remained below 65% since 2016.

During Tuesday’s Philippine economic briefing, BSP Governor Benjamin E. Diokno said that the BSP ensures that the banking system remains sound and stable.

Diokno said the indicators point to continued growth in assets, deposits and capital, as well as net profit and liquidity buffers. “Banks have large loan loss reserves and manageable loan quality. These allow the banking system to support the economy,” he added.


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Sallie R. Loera