PH banks' bad loan ratio falls to its lowest

ABS-CBN News

Posted at Sep 07 2012 12:11 PM | Updated as of Sep 08 2012 03:01 AM

MANILA, Philippines - Philippine banks' exposure to bad debts dropped again in June.

The non-performing loans (NPL) ratio of universal and commercial banks improved at 2.06% as of end-June lower by 0.12% from the previous month's 2.18%. It was also 0.39% lower than a year ago's 2.45% ratio. The average NPL ratio in June is the lowest on record.

"The month-on-month decline in the industry's NPL ratio resulted from the simultaneous 2.73% cut in NPLs to P69.05 billion and the 3.25% expansion in total loan portfolio to P3,355.04 billion from P3,249.47 billion," the Bangko Sentral ng Pilipinas (BSP) said. 

The NPL ratio is the proportion of non-performing loans or bad loans to the outstanding loans of banks. A loan is considered bad once it is left unpaid for at least 30 days upon maturity. 

The BSP said Philippine universal and commercial banks have sufficient capital to cover potential credit losses. "The industry's provisioning against potential credit losses remained adequate," it said. 

The NPL coverage ratio (loan loss reserves to NPLs) strengthened to 136.45% as of end-June, from 128.93% in July and from a year ago's 126.17% ratio.