Filipino banks’ Asset QualIty deteriorated like that of the industry Grove non -performance loan (NPL) The ratio increased in January, according to to data from the Bangko Sentral NG Pilipinas (BSP).
Provisional data from the Central Bank showed that the poor loan ratio in January increased to 3.38% of 3.27% in December. This was the highest in two months or since the 3.54% in November.
However, this was lower than 3.44% in the same month in 2024.
Data from the Central Bank showed that the amount of acid loans in January increased by 2.5% to P512.83 billion from P500.43 billion a month earlier.
Year after year, bad loans increased by 11.3% of P460.76 billion.
Loans are considered non -performance if they remain unpaid for at least 90 days after the expiry date. These are considered risk assets Because it is unlikely that borrowers will pay.
The total credit portfolio of the banking system was on P15.18 trillion from the end of January, with 1% of P15.32 trillion towards the end of the December. Year after year it jumped with 13.4% From P13.38 trillion a year ago.
The loans owed in the past increased by 4.6% month after month to P633.07 billion from P605.22 billion. It also climbed with 10.8% of P571.56 billion a year earlier.
This brought the past ratio to 4.17%, higher than 3.95%in December, but a year ago lower than 4.27%.
In the meantime, the restructured loans rose by 0.3% to P311.22 billion from P310.44 billion in December in January. It rose by 3.1% of P302 billion in January 2024.
Restructured loans accounted for 2.05% of the total industry loan portfolio, a bit above 2.03% in the month before, but lower than 2.26% in January 2024.
The reserves of the loan loss of banks amounted to P488.48 billion, an increase of 1.6% compared to P480.64 billion in December and by 5.7% of P462.12 billion a year ago.
This brought the January -lending reserve -ratio to 3.22% of 3.14% in December and 3.45% in the same month in 2024.
The NPL coverage ratio of the lenders, who measure the reimbursement for possible losses as a result of poor loans, dropped to 95.25% in January to 96.04% in December and 100.29% in 2023.
Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said that the increase in the NPL ratio reflects the continuous growth in bank loans.
The last data of the BSP showed that bank loans in January increased by 12.8% to P13.02 trillion, the fastest pace in more than two years.
“The higher NPL in January can be a reflection of a higher demand for loan during the holidays until the beginning of 2025, but I don’t think this is a reason for concern about liquidity,” said Reinielle Matt M. Ereece, economist at Oikonomia Advisory and Research, Inc ..
“Slow economic growth that we saw in the last quarter can also be a cause of a struggle in the reimbursement of these loans as a result of slow profit growth,” he added.
The tariff cycle of the central bank in the second half of the year also strengthened the demand for loans, Mr. Ricafort said.
The BSP started its relaxation cycle in August last year and reduced the loan costs for three straight meetings, which reduced the most important rate with a total of 75 basic points (BPS) against the end-2024.
“The light monthly pick -up on the NPL ratio may have to do with the seasonal delay in sales, income and other business activities when crossing the new year from the Christmas holiday that is considered one of the highest sales for many companies,” he added.
For the coming months, Mr. Ricafort said that the recent reduction of the reserve -requirement ratio of banks (RRR) could penetrate the liquidity into the financial system and stimulate banks and investments.
With effect from March 28, the BSP will lower the RRR of universal and commercial banks and financial institutions for non-bank with quasi-banking positions by 200 BP to 5% of 7%.
It will also reduce the RRR for digital banks by 150 BP to 2.5%, while the ratio for savings shooters is reduced by 100 bps to 0%.
The RRR of national and cooperative banks is zero since October, the last time the BSP has lowered the reserve requirements.
“We expect that NPLs will improve in the remaining months of the year as the interest rates fall and as economic growth supports higher incomes for both consumers and companies, so that they can meet their obligations,” Mr. Erece added. – Luisa Maria Jacinta C. Jocson