Banks' non-performing loan ratio at 3.44% in February

By Anna Leah Gonzales

April 4, 2024, 1:39 pm

MANILA – The Bangko Sentral ng Pilipinas (BSP) said the proportion of non-performing loans (NPLs) of Philippine banks to their total loans settled reached 3.44 percent as of February this year.

BSP data released late Wednesday showed that the ratio during the month was the same as the NPL ratio recorded in January this year.

It was, however, higher than the 3.31 percent in February last year.

The gross non-performing loans amounted to PHP466.11 billion, higher than the PHP460.7 billion in January this year and the PHP411.18 billion recorded in February last year.

In a comment, Rizal Commercial Banking Corporation chief economist Michael Ricafort said the year-on-year increase in the NPL was partly due to higher interest rates globally and locally.

"Nevertheless, looking at the bigger picture, banks’ NPL ratio [is] still among the lowest in 3.5 years or since August 2020 and still better from the pandemic high of 4.51% posted in August 2021," he said.

Ricafort said that in the coming months, possible Fed and local policy rate cuts could help reduce borrowing costs.

He said this "could somewhat help stimulate more business, investments, and trade worldwide that could further support recovery for many businesses and could somewhat improve the ability to pay off some borrowers, thereby could lead to some improvement in banks’ NPL ratio, going forward."

Separate data released by the BSP, meanwhile, showed that banks' total assets slightly went up to PHP24.95 trillion in February this year from PHP24.80 trillion in January. (PNA)