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TBs’ NPL ratio remains manageable

Posted on July 29, 2015

MANILA, July 29 (PNA) — The gross non-performing loans (NPLs) of thrift banks stood at 4.54 percent of the banks’ total loan portfolio (TLP) of Php 600.98 billion at end-March 2015.

The first quarter figure slightly increased from the 4.40 percent gross NPL ratio registered a quarter earlier. The banks’ NPL rose by 7.56 percent to Php 27.29 billion in March from Php 25.37 billion recorded at end-2014. Meanwhile, the industry’s TLP grew by 4.33 percent from Php 576.06 billion posted in end-December last year.

Aside from keeping NPL levels manageable, the industry also maintained substantial reserves for potential credit losses. At end-March, TBs’ allocated loan loss reserves equivalent to 74.96 percent of their gross NPLs, slightly lower than the 76.73 percent posted a quarter earlier but up from the 69.37 percent recorded in the same period in 2014.

Despite the quarter-on-quarter decrease in the NPL coverage ratio of TBs, this ratio has been generally rising since March 2010. This is a welcomed trend since setting aside reserves for potential credit losses is a prudential measure for mitigating credit risk.

The Bangko Sentral ng Pilipinas monitors the loan quality of the banks as part of its effort to promote sound credit risk management among banks which is essential to maintaining the stability of the financial system. (PNA)

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