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TBs Maintain NPL Ratio Amid Rise in Lending

04.29.2016

The gross non-performing loans (NPLs) of thrift banks (TBs) accounted for 4.5 percent of their total loan portfolio (TLP) at end-December 2015.

The TBs’ latest NPL ratio was relatively unchanged from the 4.4 percent reported a year earlier as the banks’ gross NPLs increased at about the same pace as their TLP year-on-year.

The banks’ gross NPLs of Php 31.2 billion in December 2015 went up from the Php 25.4 billion registered a year earlier. The TBs’ TLP, meanwhile, rose to Php 688.9 billion from the Php 576.1 billion recorded at end-December 2014.

Aside from maintaining the NPL ratio, the industry also continued to set aside substantial reserves for potential credit losses. At end-December 2015, TBs allocated loan loss reserves equivalent to 73.9 percent of their gross NPLs.  This NPL coverage ratio stood at 76.7 percent a year earlier.

Moreover, the industry’s gross NPLs also remained manageable across economic sectors as seen in loans to individuals for consumption purposes; real estate activities; wholesale and retail trade; and financial and insurance activities, which represented 80 percent of the banks’ TLP in December 2015.
The Bangko Sentral ng Pilipinas monitors banks’ loan quality as part of its supervisory efforts to ensure sound credit risk management.  This is essential to the BSP’s policy objective of promoting financial stability.

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