BAD DEBTS held by big banks increased slightly as of end-June, even as they accounted for a smaller share of total loans amid a growing portfolio, according to latest available central bank data.
Non-performing loans (NPLs) held by universal and commercial banks totalled P110.606 billion as of June, 9.5% more than the P101.006 billion in problem debts incurred the past year.
NPLs refer to loans left unpaid at least 30 days past due date. These are considered risky assets given a slim chance that borrowers concerned will settle their debt, resulting in turn in losses for the lender.
Despite this, the increase of soured debts was actually slower than the 17.5% increase in total lending, as banks handed out a cumulative P8.331 trillion in credit to their clients. This compares to a P7.09-trillion loan book in 2017’s first semester, according to data from the Bangko Sentral ng Pilipinas (BSP).
Compared to total loans, the share of NPLs dipped to 1.33%, smaller than the 1.34% ratio recorded in May and the 1.42% share in June 2017. This meant that the stash of problem debts became more manageable for lenders.
The banks also beefed up defenses against possible credit losses amid brisk lending. They set aside P158.846 billion to cover for potential loan losses, 14% more than the P139.28 billion allotted for this purpose a year ago.
This is more than enough to cover NPLs, meaning banks concerned will remain on solid footing even if these problem loans are written off.
Non-performing assets held by banks steadied at P76.217 billion. This includes the value of real property and other items seized from clients for failing to pay their debt.
Banks also remained fairly liquid as deposits surged 11% to P11.019 trillion, enough to cover total loans.
The BSP monitors NPL ratios of banks and other financial firms in order to monitor asset quality and preserve the soundness of the financial system.
In a related development, the central bank also announced regulatory relief for banks and financial firms affected by typhoon Josie. The typhoon struck parts of the country in July, aggravating monsoon rains.
In a statement, the BSP said it has approved the grant of regulatory and rediscounting relief to banks based in towns in Ilocos, the Cordillera Administrative Region, Cagayan Valley, Central Luzon, Calabarzon, Mimaropa and Western Visayas.
For Metro Manila, banks located in Malabon, Marikina, Parañaque, Pasig, Quezon City and Valenzuela will also be given the option to avail themselves of relief measures as they recover from the typhoon’s wrath.
Thrift, rural and cooperative banks are allowed to exclude outstanding loans from borrowers in the covered areas in computing their past due ratios, provided that such borrowings are restructured or given relief.
The BSP will not penalize banks in the covered provinces even if their reserves fall short of requirement.
Those under rehabilitation may pause in settling their monthly dues with the BSP.
No fines will be imposed on such banks for delayed submission of regulatory reports to the BSP.
All banks located in the affected areas may likewise extend financial aid to their officers and employees, even beyond the set of fringe benefits approved by the BSP for each firm.
The central bank extends relief to banks and quasi-banks following natural calamities and disasters which disrupt their day-to-day operations.
The BSP announced a set of relief measures for banks in war-torn Marawi City back in January. — Melissa Luz T. Lopez