Philippine commercial banks' non-performing loans slipped to 3.78 percent of total loans in November, the lowest since June 1997, from 3.97 percent in October, the central bank said on Monday.
The improvement in bank's soured loans in November was due to the 4.77 percent expansion in total loans of commercial banks to P2.47 trillion ($52 billion) during the month.
This was accompanied by a 0.28 percent decline in bad loans to P93.3 billion, the central bank said in a statement.
The central bank said last month it expects a slight rise in bad loans this year as the global financial turmoil bears down on the local economy. But it said any increase would not reach levels hit after the Asian financial crisis.
Bad loans were at 3.37 percent of total loan portfolio in June 1997 shortly before the Asian financial crisis erupted and sent the ratio to a peak of more than 18 percent in October 2001 following defaults by corporate borrowers.
Philippine banks' bad loan ratio has significantly improved after the government imposed a law that granted incentives to buyers of banks' soured assets for a limited period. The law expired last year.