The Philippines: Banks’ bad loans ratio eases to 6-month low

  • The asset quality of Philippine banks improved for the second straight month in Oct 21 as the industry’s gross non-performing loan (NPL) ratio eased to a six-month low of 4.42% from the revised 4.44% in Sep 21, according to the Bangko Sentral ng Pilipinas (BSP).
  • The banking sector’s NPL ratio has been declining after hitting a 13-year high of 4.51% in Jul 21 and Aug 21 as credit growth continued to pick up amid the gradual reopening of the economy and further easing of COVID lockdown measures.
  • Preliminary data from the central bank showed the gross NPL ratio of the banking industry in Oct 21 was the lowest since the 4.35% recorded in Apr 21.
  • As of end-Oct 21, past due loans, or those loans left unsettled beyond payment date, recorded a double-digit increase of 10.3% y/y to PHP565.78bn from PHP512.89bn a year ago, resulting in past due ratio of 5.16%.
  • Likewise, the industry’s restructured loans amounted to PHP337.82bn in Oct 21 or 2.5 times the PHP137.08bn recorded in the same month 2020, translating to a restructured loan ratio of 3.08%.
  • Meanwhile, the industry’s non-performing assets grew by +18.5% to PHP602.51bn from PHP508.41bn, resulting in an NPA to gross asset ratio of 2.94%.

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