The gross non-performing loan (NPL) ratio of universal and commercial banks (U/KBs) declined to 1.98 percent in November 2014 as said banking indicator touched record lows during the last three reporting periods.
The November figure followed the 2.05 percent NPL ratio recorded in October and the 2.04 percent in September last year. The three latest figures are the industry’s lowest since December 2009.
The gross NPL ratio declined last November amid a month-on-month drop in NPLs and rise in total loan portfolio (TLP). U/KBs’ gross NPLs stood at Php 95.52 billion in November 2014, lower than the Php 96.54 billion posted a month earlier. Meanwhile, the banks’ TLP rose to Php 4.83 trillion last November from Php 4.712 trillion in October 2014.
Aside from low NPL levels, the banks kept loan loss reserves higher than gross NPLs. In November 2014, the industry provisioned for 140.91 percent of its gross NPLs, higher than the 138.64 percent recorded a month earlier.
The Bangko Sentral ng Pilipinas (BSP) also noted that gross NPLs across economic sectors remained manageable. This was seen in financial intermediation; real estate, renting and business activities; manufacturing; wholesale and retail trade; and electricity, gas and water supply, which represented 71.4 percent of the banks’ TLP during the period.
NPL management and provisioning for potential credit loss are prudential measures that foster the stability of individual banks as well as the domestic banking system. This is in line with the BSP’s broader objective of promoting financial stability.