By Luisa Maria Jacinta C. Jocson, A reporter
Property of PHILIPPINE BANKS quality continued to worsen as the ratio of non-performing loans (NPL) rose to a more than two-year high in October.
Preliminary data from the Bangko Sentral ng Pilipinas (BSP) showed the rate rose to 3.6% from 3.47% in September and 3.44% last year.
This was the highest NPL ratio since 3.75% in May 2022. It matched the 3.6% NPL ratio in June 2022.
Data from the BSP showed that outstanding loans increased by 1.3% to P524.31 billion in October from P517.45 billion in the previous month.
Year-on-year, bad loans decreased by 16.7% from P449.45 billion.
A loan is considered non-performing if it remains unpaid for at least 90 days after the due date. These are considered risky assets as borrowers are less likely to repay.
Total loans of the banking system stood at P14.55 trillion, down 2.4% from P14.9 trillion at the end of September. However, it increased by 11.3% from P13.07 trillion last year.
Past loans increased by 1.3% to P640.88 billion in October from P632.87 billion in the previous month. It also increased by 15% from P557.27 billion last year.
This brought the previous fixed rate to 4.4%, up from 4.25% in September and 4.26% last year.
On the other hand, restructured loans decreased by 0.6% month-on-month to P292.75 billion from P294.53 billion in September and 5.3% from P309.16 billion last year.
Restructured loans accounted for 2.01% of the sector’s loan portfolio, up from 1.98% the previous month but down from 2.36% in October 2023.
Bank loans stood at P487.52 billion, up 1% from P482.84 billion in September and up 5.7% from P461.41 billion last year.
This lowered the loan loss ratio to 3.35%, from 3.24%. last month and 3.53% last year.
Lenders’ NPL coverage ratio, which measures the potential allowance for bad loans, fell to 92.28% in October from 93.31% in September and 102.66% in 2023.
Chief Economist Rizal Commercial Banking Corp. Michael L. Ricafort said the rise in NPLs may be due to the start of the BSP’s monetary easing cycle.
The central bank began its policy easing cycle in August with a 25-basis-point (bp) rate cut. It delivered another 25-bp cut in October, bringing the key rate to 6%.
BSP Governor Eli M. Remolona, Jr. previously said they may lower or keep rates steady in the last annual policy review on Dec. 19.
“The series of storm damage could have led to business disruptions that could have led to some losses, both actual losses and the potential to lead to a higher proportion of NPLs,” said Mr. Ricafort.
In October, the country was hit by Severe Tropical Storm Kristine and Super Typhoon Leon.
Mr. Ricafort also cited geopolitical risks and tensions in the Middle East “weighing on global investment, trade, and other business activities.”
Source link
