go through Luisa Maria Jacinta C. Jocson, Senior Reporter
Philippine banking system The ratio of non-performing loans (NPL) has reached Preliminary data for Bangkok Sentral NG Pilipinas (BSP) were higher in April and five months high.
Banks’ non-performing loan ratio rose to 4.39% from 3.3% in March. However, it relaxed from 3.45% a year ago.
This is the highest non-performing loan ratio in five months, or 3.54% since November 2024 login.
Data from BSP showed that as of April, acid loans fell to 0.6%, to 51.23 billion to 51.63 billion rupees, up from 5.1612 billion a month ago.
In 2024, non-performing loans jumped 8% from P480.65 billion in the same month of 2024.
Once a loan remains unpaid for at least 90 days on the maturity date, it is considered a bad manifestation. These are considered risky assets because borrowers are unlikely to pay.
BSP data also showed that as of April, the total loan portfolio of the banking system was P15.34 trillion P15.34 trillion, and as of the end of March, B15.63 trillion P15.63 trillion fell by 1.9%. On the other hand, it was from P13.94 trillion a year ago.
In April, past due loans rose 1.1% to 65.26 billion from Phillips 64.637 billion in March. Likewise, it is 5.7% higher than P618.04 billion times the same period last year.
This has increased the appropriate loan ratio in the past to 4.26%, higher than 4.14% in March, but lower 4.43% in the same period in 2024.
Restructuring loans in April were 0.1% higher than P311.48 billion shares in the 311.48 billion month period to P311.66 billion. In the year, it rose 7.3% from P29.037 billion.
Restructuring loans accounted for 2.03% of the industry’s total loan portfolio in April, exceeding 1.99%, but were below 2.08% in April 2024.
Banks’ loan losses were 49.79 billion pesos, up from 490.56 million p49.056 billion a year ago, 4.8% higher than 471.35 billion pesos a year ago.
This brought the loan loss reserve ratio to 3.22% in April, up from 3.14% last month, but down from 3.38% a year ago.
The lender’s NPL coverage rate estimates the allowance for potential losses due to non-performing loans, with a loss rate of 95.1% in April at 95.05% in March and 98.07% a year ago.
“The rise in NPL ratios may reflect a persistent response to stricter financial conditions, higher interest rates, and stress on life for families and businesses,” said John Paolo R. Rivera, a senior researcher at the Philippine Development Institute.
“Although it is still relatively low and manageable, early pressure signs of rising signals, especially among more vulnerable borrowers (such as MSMES (Micro, SME) and low-income consumers). This is not a cause of concern, I think, but it is a signal that banks are vigilant in credit risk management.”
Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., said the NPL rose slightly amid slowdown in growth in bank loans.
Bank loans rose 11.8% year-on-year to P13.19 trillion in March, the slowest pace in four months as loan growth in production activity and consumers eased.
Oikonomia Advisory and Research, Inc. Reinielle Matt M. Erece, an economist, said the growth in unemployment rate could also be a factor in the growth of NPLS.
“On the consumer side, the higher unemployment rate in the past few months may indicate slower revenue growth, making it more difficult to pay for loans. In addition, slow demand and business growth may also affect business cash flows during this period,” he said.
The latest data from the local bureau of statistics shows that the unemployment rate rose from 3.9% in March to 4.1% in April, and 4% to 4% a year ago.
That’s equivalent to 2.06 million of Filipinos who lost their jobs in April, more than 1.93 million a year ago, and 2.04 million a year ago.
“If the trend continues over the next few months, it could indicate that some sectors of the economy are having difficulties with debt, which could be due to slower revenue recovery or increased liquidity,” Rivera said.
“Money authorities and banks may monitor this closely. If credit quality deteriorates further, it may prompt more cautious lending practices and affect the overall rate of credit growth, which in turn may have a greater impact on economic recovery and domestic consumption.”
