BAD DEBTS held by thrift banks picked up in November to outpace the growth in total loans, latest data from the Bangko Sentral ng Pilipinas (BSP) showed.

Non-performing loans (NPLs) held by these lenders rose to P41.715 billion, up 13% from the P36.932 billion tallied in November 2016. This also picked up from the P41.159 billion in soured loans as of end-October, according to central bank data.

NPLs refer to unsettled debts for at least 30 days past due date. These are considered as risky assets due to a high risk of default.

The pickup in bad loans grew faster than the banks’ total loan portfolio, which grew by a tenth to P841.283 billion from P761.665 billion the previous year.

This likewise outpaced a 10.3% rise in bank deposits, which reached P936.995 billion as of November. Of this amount, 89.8% has been deployed for lending.

Thrift banks are focused on lending to consumers and small firms, which is deemed a riskier segment. This sets them apart from the operations of the bigger universal and commercial banks as they cater mostly to corporate clients.

The NPL stash took a 4.96% share relative to total loans, higher than the 4.85% ratio posted in November 2016.

On the other hand, non-performing assets held by thrift banks declined to P21.784 billion in November, coming from P22.752 billion worth of idle assets a year ago. These refer to properties and collateral seized by the banks from non-paying borrowers, which allow them to recover losses from credit defaults.

With the bigger amount of NPLs, the lenders decided to hike the allowance they set aside for potential loan losses to P28.513 billion, up by 4.6% from P27.27 billion previously. However, this can only cover 68.35% of the problematic debts, which is lower than the 73.84% coverage in November 2016.

Thrift banks made an aggregate P12.271 billion in net income from January to September 2017, 17.2% higher than the P10.47 billion they made during the comparable period in 2016.

Across the Philippine banking system, soured debts worth P163.103 billion took a 1.9% share of the P8.574 trillion total loans handed out by the country’s lenders.

There are 54 thrift banks operating in the Philippines as of end-September 2017, according to the central bank.

The BSP keeps a close watch on the loan and asset quality of banks and financial firms in order to maintain the soundness of the local financial system. — Melissa Luz T. Lopez

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