Bad loans ratio eases to 6-month low

The proportion of banks’ bad loans dropped to its lowest level in six months in September, reflecting improving payment capacity among borrowers as better weather conditions and increased business activity allowed more firms and households to catch up on debt payments.

- By KEISHA TA-ASAN

Data from the Bangko Sentral ng Pilipinas (BSP) showed the banking sector’s nonperforming loan (NPL) ratio eased to 3.31 percent in September from 3.5 percent in August.

The September figure marked the lowest level since 3.3 percent in March. It was also lower than the 3.47 percent recorded a year ago.

Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said the decline was largely due to the normalization of business operations in September after several weeks of weather disruptions in previous months.

“This is largely due to better weather conditions in September compared to August, when storms and flooding reduced the number of working days and disrupted loan collection activities,” Ricafort said.