Loan defaults soar on rising interest rates

The share of soured loans to the banking sector’s total loan book increased to an 11-month high of 3.45 percent as of end-April, ending two straight months of decline, amid a high interest rate environment, according to the Bangko Sentral ng Pilipinas (BSP).

- KEISHA TA-ASAN

Preliminary data released by the BSP showed that the non-performing loan (NPL) ratio of Philippine banks was the highest in 11 months or since the 3.46 percent recorded in May 2023.

This was also higher than the 3.41 percent recorded in the same month a year ago.

Commercial loans are considered non performing if the borrower has not made the scheduled payments for 90 days after the due date. They are deemed as risk assets because borrowers are unlikely to pay these loans.