The big universal and commercial lenders kept their soured or nonperforming loans (NPLs) at record lows in November last year, and sustained a decline seen in the past three reporting periods.
The Bangko Sentral ng Pilipinas (BSP) said on Tuesday that the NPL ratio of universal and commercial banks fell to only 1.98 percent in November 2014.
The central bank said the large banks posted improving soured loan ratios that touched record lows the past three months before the latest data.
In particular, the November NPL report followed the 2.05-percent NPL ratio posted last October and the 2.04 percent the previous September.
“The three latest figures are the industry’s lowest since December 2009,” the BSP said.
NPLs, also popularly known as “bad” or “soured” loans, are credit accommodations that have not been paid for 90 days or more after the fall due.
A lower NPL ratio is indicative of a bank less susceptible to loan quality erosion as its loan assets are healthy with only a small percentage of bad loans.
In absolute terms, the NPLs of universal or expanded license banks stood at P95.52 billion last November, lower than the P96.54 billion reported a month earlier.
Also, aside from the low NPL levels, the BSP noted that the banks kept more than ample loan loss reserves during the period, covering about 140.91 percent of the total NPL volume in end-November 2014. This is a larger coverage compared to the 138.64 percent seen in the previous month.
In the case of thrift or savings banks, the BSP reported similarly robust quality of their loans as of end-September 2014, which declined from 4.83 percent at end-June 2014 and 5.89 percent at end-September 2013 to 4.52 percent at the end-September 2014.
The improving quality of the loan portfolio of the thrift banking system came even as the loan portfolio itself grew larger to P575.78 billion.
Thrift banks also set aside substantial reserves for potential credit losses as its so-called loan-loss reserve cover of 74.38 percent at end-September 2014 proved higher than the 70.27 percent loan-loss cover at end-June last year.