Bank bad loan ratio slightly eases in May

The Philippine banking system's gross nonperforming loan (NPL) ratio slightly eased to 3.38 percent in May, as continued double-digit growth in bank lending expanded the loan base and, along with the central bank’s cumulative 1.25-percent policy rate cut, helped reduce borrowing costs and improve borrowers’ ability to repay.

- BY DERCO ROSAL

According to the latest data from the Bangko Sentral ng Pilipinas (BSP), the banking industry’s NPL ratio slightly improved in the middle of the second quarter from the higher 3.39 percent in April.

Still, May’s bad loan ratio remains eight basis points (bps) higher than March’s 3.3 percent. Year-on-year, however, it was lower than the 3.57-percent gross NPL ratio seen in May 2024.

BSP data showed bad loans increased by 1.6 percent to P527.4 billion as of end-May from P519.2 billion in April. Year-on-year, soured loans hiked by 6.4 percent from P495.7 billion in May last year.