SOURED DEBTS held by thrift lenders grew by a tenth in 2017 to match the increase in total loans granted from a year ago, latest central bank data showed, as these banks enjoyed a surge in profits.
Non-performing loans (NPLs) held by thrift lenders reached P40.448 billion at end-December, up by 10.4% from the P36.654 billion tallied in 2016, according to the Bangko Sentral ng Pilipinas (BSP). The figure, however, declined from the P41.715 billion in bad loans incurred as of November.
NPLs refer to debts left unpaid for at least 30 days past due date. These are considered as risky assets due to a high risk of default that would spell losses for the bank.
The growth in NPLs matched a 10.6% increase in the banks’ total loan portfolio, which expanded to P860.304 billion from P778.133 billion the previous year.
NPLs accounted for 4.7% of total credit lines extended by the banks, barely changed from the 4.71% ratio posted in December 2016.
Despite the increase in problem loans, the thrift lenders kept their reserves for potential defaults steady at P26.929 billion, which can only cover 66.58% of the NPL stash. This declined from the 73.05% coverage ratio recorded in 2016.
Thrift banks are focused on lending to consumers and small-scale firms, which is are deemed riskier segments. On the other hand, the bigger universal and commercial banks cater mostly to corporate clients.
Meanwhile, bank deposits likewise reached P945.431 billion, growing by 8.3% from the P872.869 billion tallied in 2016.
Thrift banks enjoyed a 29.2% improvement in bottom lines, according to BSP data. The lenders reported a cumulative net income of P17.939 billion in 2017, surging from the P13.889 billion booked in 2016.
Cost-to-income ratio also improved to 62.71% from 63.58% the prior year, as a cumulative P45.65 billion non-interest expenses generated a P72.798-billion operating income for thrift players.
There are 54 thrift banks operating in the Philippines as of end-September.
The central bank monitors the loan and asset quality of banks and other financial firms as they seek to maintain a stable financial system. — Melissa Luz T. Lopez