Universal and commercial banks (U/KBs) kept their gross non-performing loans (NPL) low at 2.6 percent of total loan portfolio (TLP) in September this year. The gross NPL ratio stayed low amid a year-on-year decline in soured loans and the continued rise in lending.
U/KBs posted Php 102.09 billion in NPLs in September, lower than the Php103.42 billion recorded a year earlier. The banks’ TLP, meanwhile, increased to Php 3.92 trillion in September from Php 3.44 trillion during the same month last year.
The industry also continued to set aside substantial reserves for potential credit losses as U/KBs provisioned for 128.80 percent of their gross NPLs in September.
Aside from gross NPLs, which are the actual level of NPLs, the Bangko Sentral ng Pilipinas (BSP) also monitors the NPLs net of specific allowances for potential credit losses. The net NPLs of U/KBs also remained low at 0.45 percent of TLP in September.
The U/KBs NPL levels also continue to remain low across economic sectors. This is seen in the financial intermediation, real estate, manufacturing and wholesale and retail trade sectors which together accounted for 62.8 percent of the banks’ TLP in September.
Low NPL ratios and robust loan loss provisioning indicate prudent management of credit risks. The BSP continues to monitor these indicators as part of its objective to maintain the stability of individual banks and of the domestic financial system.