Banks' bad loan ratio eases in June

THE Philippine banking sector's nonperforming loan (NPL) ratio dropped to a three-month low in June even as banks continued to expand their lending portfolios, Bangko Sentral ng Pilipinas (BSP) data showed.

- By Katherine K. Chan

Data from the BSP showed banks’ gross NPL ratio eased to 3.34% in June from 3.38% in May, and 3.51% in the same month last year.

This was the lowest NPL ratio in three months or since the 3.3% in March.

Loans are considered nonperforming once they are unpaid for at least 90 days after the due date. These are deemed as risk assets since borrowers are unlikely to pay.

The amount of nonperforming loans inched up by 0.5% to P530.29 billion in June from P527.45 billion in May. Soured loans also jumped by 5.5% year on year from P502.42 billion.

The total loan portfolio of the banking system stood at P15.88 trillion as of end-June, up by 1.69% from P15.62 trillion at end-May and up by 10.9% from P14.32 trillion a year ago.

Reinielle Matt M. Erece, an economist at Oikonomia Advisory and Research, Inc., said the impact of policy rate cuts are starting to spill over to bank lending rates.

"We have seen lower interest rates which may make it easier for borrowers to repay their obligations," he said.