Philippine banks remain robust

NPL ratio improves to 2.05% in first three quarters.

The non-performing loan (NPL) ratio of Philippine universal and commercial banks improved to 2.05% from 2.46% year-on-year, reported the Bangko Sentral ng Pilipinas, the central bank. The ratio was also better than the 2.08% in the first eight months of the year.

Excluding interbank loans, the ratio also improved to 2.15% from 2.46% percent year-on-year and 2.08% as of August.

The central bank said the combined effect of extending more loans and having some bad ones paid contributed to banking’s improved performance. It also said the industry’s provisioning against potential credit losses remained adequate.

Loans totaling US$86.3 billion were granted during the first nine months, up 12.9% from last year’s US$74 billion. The latest figure was also an improvement from US$82.8 billion as of August.

Bad loans fell to 5.91% year-on-year to US$1.5 billion. Restructured loans rose 1.03% to US$870 million.

Non-performing assets fell during the period to US$4.3 billion from January to September, down from US$4.7 billion year-on-year.

As of the third quarter, NPL coverage ratio stood at 136% while NPA coverage ratio reached 69.4%.