THE quality of assets held by the country’s regular commercial, as well as universal banks remained broadly unchanged in October last year, the Bangko Sentral ng Pilipinas (BSP) said on Friday.
In particular, the ratio of the gross nonperforming loans (NPLs) of universal and commercial banks to their total loan portfolio stood at 1.77 percent for the period.
This was an improvement from the 1.82-percent NPL ratio reported in September.
The improvement in the banks’ NPL ratio was noted against a background of an expansion in their total loan portfolio.
NPLs are also alternately known as “bad” or “soured” loans as these are credit accommodations that have not been paid for more than 90 days after its original due date.
A higher NPL ratio renders banks more susceptible to loan quality erosion and unhealthy loan asset ownership down the line.
The universal and commercial bank’s NPL ratio has proven below 2 percent since November 2014.
The absolute value of NPLs hit P94.52 billion in October, from the P95.24 billion a month earlier.
“The latest loan quality indicators show universal and commercial banks’ continued adherence to high credit standards,” the BSP said.
The total loan portfolio of banks, meanwhile, during the time grew to P5.35 trillion, form the P5.24 trillion posted a month earlier.
The BSP also noted that banks continued to allocate substantial reserves as buffer for potential credit losses. At end-October last year, the industry provisioned for 140.97 percent of its gross NPLs.
Across economic sectors, NPL levels also remained manageable as seen in financial and insurance activities; real estate, manufacturing, wholesale and retail trade; electricity, gas, steam and air-conditioning supply.