NPL Ratio Remains Low Amid Loan Growth

Manila—(PHStocks)—The ratio between the gross non-performing loans (NPLs) of universal and commercial banks (U/KBs) and their total loan portfolio (TLP) remained low at 1.86 percent as of end-August this year, according to Bangko Sentral ng Pilipinas (BSP).

The U/KBs’ gross NPL ratio in August marginally improved from the 1.9 percent reported at end-July this year. Since November 2014, the monthly loan quality indicator has been below two percent.

The banks kept their NPL ratio manageable in August as U/KBs’ gross NPLs remained practically unchanged amid a marginal month-on-month expansion in TLP.

The U/KBs’ gross NPLs of PhP97.05 billion in August moved down slightly from the PhP97.08 billion posted a month earlier. The banks’ TLP, meanwhile, rose to PhP5.209 trillion in August from the PhP5.114 trillion posted in July this year.

While the industry maintained a low NPL ratio, U/KBs continued to set aside adequate reserves for potential credit losses. At end-August this year, the industry provisioned for 141.19 percent of its gross NPLs. The NPL coverage ratio stood at 140.15 percent a month earlier.

The U/KBs’ gross NPLs also remained manageable across economic sectors as seen in financial and insurance activities; real estate; manufacturing; wholesale and retail trade; and electricity, gas, steam and air-conditioning supply, which accounted for 68.7 percent of the banks’ TLP in August this year.

The latest loan quality indicators reflect the U/KBs’ continued adherence to high credit standards. The Bangko Sentral ng Pilipinas monitors the quality of U/KBs’ loan portfolio as part of its supervisory efforts to ensure the soundness of the banking system and to promote financial stability.