The gross non-performing loan (NPL) ratio of universal and commercial banks (U/KBs) dropped to 1.82 percent as of end-December 2014 from 1.98 percent as of end-November 2014. This is the lowest NPL ratio posted by the U/KBs in the years after the 1997 crisis.
The indicator reached a record low amid a month-on-month decline in NPLs and an increase in the banks’ total loan portfolio (TLP).
The banks’ NPLs decreased to Php 93.06 billion at the end-2014 from Php 95.52 billion in November last year. The U/KBs’ TLP, on the other hand, rose to Php 5.118 trillion last December from Php 4.83 trillion a month earlier.
Aside from keeping the NPL ratio low, the U/KBs continue to allocate substantial reserves for potential credit losses. At end-December last year, the industry’s loan loss reserves represented 142.43 percent of its NPLs. The figure rose from the 140.91 percent recorded a month earlier.
The industry’s gross NPLs also remained manageable across economic sectors, as seen in financial intermediation; real estate, renting and business activities; manufacturing; wholesale and retail trade; and electricity, gas and water supply. Said sectors received 72.4 percent of the U/KBs’ TLP at end-2014.
The Bangko Sentral ng Pilipinas monitors the quality of bank loans as part of its efforts to foster the strength of individual banks as well as the systemic stability of the domestic banking industry.