By Luisa Maria Jacinta C. Jocson, Reporter
THE PHILIPPINE banking system’s gross nonperforming mortgage (NPL) ratio eased in September, preliminary information from the Bangko Sentral ng Pilipinas (BSP) confirmed.
The banking business’s gross NPL ratio slipped to three.47% in September from the over two-year excessive of three.59% in August. Nonetheless, it was nonetheless larger than 3.4% in the identical interval in 2023.
This was additionally the bottom NPL ratio in five months or for the reason that 3.45% posted in April.
Loans are thought-about nonperforming as soon as they continue to be unpaid for no less than 90 days after the due date. These are deemed as threat belongings since debtors are unlikely to pay.
BSP information confirmed that unhealthy loans inched up by 0.9% to P517.45 billion in September from P512.7 billion within the earlier month.
12 months on 12 months, soured loans jumped by 16.5% from P444.3 billion.
The entire mortgage portfolio of Philippine banks stood at P14.9 trillion in September, up by 4.2% from P14.3 trillion in August. It additionally climbed by 14.1% from P13.06 trillion a 12 months earlier.
Overdue loans inched up by 0.2% to P632.9 billion in September from P631.4 billion within the prior month. 12 months on 12 months, overdue loans elevated by 15% from P549.9 billion.
This introduced the overdue mortgage ratio to 4.25% in September, decrease than 4.42% in August however above 4.21% a 12 months prior.
Restructured loans went up by 0.5% to P294.5 billion in September from P293.2 billion a month in the past. Nonetheless, it declined by 4.1% from P307.2 billion a 12 months earlier.
Restructured loans accounted for 1.98% of the business’s complete mortgage portfolio in September, decrease than 2.05% within the earlier month and a pair of.35% a 12 months in the past.
In September, banks’ mortgage loss reserves had been virtually flat (0.07%) at P482.8 billion from P482.5 billion a month prior. In the meantime, it rose by 4.8% from P460.8 billion 12 months on 12 months.
This introduced the mortgage loss reserve ratio to three.24%, decrease than 3.37% final month and three.53% in the identical month in 2023.
Lenders’ NPL protection ratio, which gauges the allowance for potential losses on account of unhealthy loans, slipped to 93.31% in September from 94.11% in August and 103.71% a 12 months prior.
“Banks’ NPL ratio improved amid sooner mortgage development in latest months that successfully expanded the denominator and helped ease the NPL ratio mathematically,” Rizal Industrial Banking Corp. Chief Economist Michael L. Ricafort mentioned in a Viber message.
The newest information from the BSP confirmed financial institution lending grew by 11% 12 months on 12 months to P12.4 trillion in September, its quickest tempo in practically two years or since 13.7% in December 2022.
The NPL ratio may additionally proceed to enhance additional within the coming months, Mr. Ricafort mentioned.
“The newest RRR (reserve requirement ratio) cuts that successfully infused about P400 billion into the monetary system would permit banks to extend their loanable funds that might result in sooner mortgage development and would mathematically result in decrease NPL ratio,” he mentioned.
The BSP lowered the RRR for common and business banks and nonbank monetary establishments with quasi-banking capabilities by 250 foundation factors (bps) to 7% from 9.5%, efficient on Oct. 25.
Additional price cuts by the US Federal Reserve and Philippine central financial institution would additionally result in extra demand for loans, Mr. Ricafort mentioned.
“Thus, banks’ asset high quality would nonetheless enhance when it comes to additional easing of banks’ NPL ratio, in an surroundings made extra conducive by anticipated Fed and native coverage price cuts for the approaching months,” he added.
Final week, the US central financial institution lowered its coverage price by 1 / 4 of a share level to the 4.5-4.75% vary.
In the meantime, the Bangko Sentral ng Pilipinas (BSP) has to this point lowered borrowing prices by 50 bps this 12 months because it started its easing cycle in August.
The Financial Board delivered 25-bp price cuts at every of its August and October conferences, bringing the important thing price to six%. Its closing coverage assessment for the 12 months is scheduled for Dec. 19.
