Despite a slight decrease in November, the nonperforming loan ratio of Philippine banks remains elevated compared to last year, signaling potential challenges for the financial sector.
Philippine banks saw a slight decrease in their collective nonperforming loan (NPL) ratio in November, following a two-year high recorded in the previous month, according to data from the Bangko Sentral ng Pilipinas (BSP). The bad loan ratio, encompassing loans past due for 90 days or more, dipped to 3.54 percent from October's 3.6 percent. Despite this marginal improvement, the ratio remained elevated compared to the 3.41 percent recorded a year ago. Past-due loans climbed to P635.
62 billion, surpassing the P563.38 billion observed a year earlier. These delinquent loans constituted 4.32 percent of total loans, reflecting a year-on-year increase from 4.22 percent but a decrease from the 4.4 percent registered in October. Restructured loans, meanwhile, reached P293.7 billion, a slight dip from P294.53 billion in the previous month. They represented 2.0 percent of banks' gross loan portfolio, contrasting with the higher P305.81 billion recorded a year ago.Loan loss reserves held by lenders rose to P485.13 billion, equivalent to 3.30 percent of total loans. However, this figure was lower than the 3.46 percent recorded a year earlier. The NPL coverage ratio, which gauges banks' preparedness for potential losses, also experienced a decline, reaching 93.2 percent compared to 101.47 percent a year ago. Jonathan Ravelas, senior adviser at Reyes Tacandong & Co., commented that the slight easing in the NPL ratio could be attributed to 'improved loan quality and better debt management by banks.' However, he cautioned that the year-on-year increase in past-due loans suggests that economic challenges and rising interest rates might be hindering borrowers' ability to meet their repayment obligations
Nonperforming Loans Philippine Banks Loan Quality Economic Challenges Interest Rates
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