Bad loans ratio drops

The Philippine banking system’s gross non-performing loan (NPL) ratio dropped to its lowest level in three months, as robust growth in total bank lending helped offset a slower rise in soured loans.

- DERCO ROSAL

The latest data from the Bangko Sentral ng Pilipinas (BSP) showed that the banking industry’s NPL ratio improved to 3.3 percent in March, down from a steady 3.38 percent in January and February—marking its best performance in three months.

It was also better than March 2024’s gross NPL ratio of 3.39 percent.

BSP data showed bad loans increased by 0.55 percent to P516.1 billion as of end-March from P513.3 billion in February. Year-on-year, soured loans hiked by 11.1 percent from P464.7 billion in March last year.

Loans become non-performing if unpaid for at least 90 days past due date, posing a credit risk as borrowers are less likely to repay.