Banks’ NPLs expand at end-September


Credit: Read the original article from Manila Times.

Soured loans incurred by the Philippine banking system rose to more than P364 billion in the first nine months of the year, according to the Bangko Sentral ng Pilipinas (BSP).

Preliminary data from the central bank showed on Tuesday that lenders’ gross non-performing loans (NPL) surged to P364.67 billion in January to September 2020, up 60.22 percent from the P227.60 billion in the first nine months of 2019.

NPLs are past due loans where the principal or interest is unpaid for 30 days or more after the due date. This includes the outstanding balance of loans payable in monthly installments when three or more installments are in arrears.

Data also showed that banks’ total loan portfolio declined by 0.09 percent to P10.73 trillion at end-September from P10.74 trillion at end-August.

It translated to a gross NPL ratio of 3.40 percent, higher than the 2.84 percent a month ago, and from the 2.15 percent a year earlier.

This ratio is the share of bad loans to total loans, inclusive of interbank loans. The latest NPL ratio is the highest in more than seven years or since the 3.42 percent posted in May 2013.

The central bank earlier said the NPL ratio was estimated to double from 2.4 percent at end-March to 4.6 percent by the end of 2020.

This is based on a baseline survey of banks and the impact of the coronavirus disease 2019 (Covid-19) pandemic on their operations.

To maintain a manageable NPL ratio, the BSP is pushing for the passage of the proposed Financial Institutions Strategic Transfer (FIST) Act.

FIST aims to encourage financial institutions to sell their nonperforming assets (NPAs) to asset management companies that specializes in resolving distressed assets by providing fiscal incentives.

These include exemption from documentary stamp tax, capital gains tax, creditable withholding tax and value-added tax or gross receipts tax.


Please enter your comment!
Please enter your name here