The Philippines: NPL ratio of banks relatively stable in Jun 21

  • Preliminary data released by the Bangko Sentral ng Pilipinas (BSP) showed the gross non-performing loan (NPL) ratio of banks was almost unchanged at 4.48% in Jun 21 after rising for five straight months to hit a 13-year high of 4.49% in May 21 as the country continues to struggle.
  • As banks remained risk-averse and demand from borrowers tepid due to uncertainties brought about by the global health crisis, the loan book of Philippine banks declined slightly to PHP10.77tr from PHP10.82tr.
  • The soured loans of the banking sector surged by 73.8% to PHP482.99bn in Jun 21 from PHP277.81bn in Jun 20.
  • Past due loans, jumped by 51.3% to PHP577.06bn from PHP381.43bn for a past due ratio of 5.36%.
  • Likewise, the industry’s restructured loans amounted to PHP328.65bn in Jun 21 or 6.7 times the PHP48.67bn booked in Jun 20, translating to a restructured loan ratio of 3.05%.
  • In anticipation of rising defaults due to the impact of the pandemic-induced recession, the banking sector’s allowance for credit losses increased by 31.3% to PHP397.79bn from PHP302.93bn.
  • This translated to an industry’s NPL coverage ratio of 82.36% in Jun 21 after declining for four straight months after hitting 93.86% in Jan 21.
  • On the other hand, the industry’s non-performing assets (NPA) jumped by 53.4% to PHP600.79bn in end Jun 21 from PHP391.72bn in end Jun 20.

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