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Philippines: Banks’ bad loans surge to P253 billion
MANILA, Philippines — Banks’ bad loans went up by 18.3 percent to P252.64 billion as of end-April from P213.51 billion in the same period last year amid the sharp rise in past due as well as restructured loans due to the coronavirus disease 2019 or COVID-19 pandemic, according to the Bangko Sentral ng Pilipinas.
Data from the BSP showed the increase in non-performing loans (NPLs) held by banks was faster than the 8.1 percent rise in the industry’s loan book to P11 trillion from P10.17 trillion.
NPLs or bad debts refer to past due loan accounts where the principal or interest is unpaid for 30 days or more after due date.
As a result, the banking industry’s gross NPL ratio increased for the fourth straight month to 2.3 percent of total loans as of end-April compared to a year-ago level of 2.1 percent.
Past due loans referring to all types of loans left unsettled beyond payment date surged by 41 percent to P414.41 billion from P293.63 billion, while restructured loans increased by 20.2 percent to P47.5 billion from P39.52 billion.
Month-on-month, past due loans jumped by 21.5 percent to P414.14 billion as of end-April from P341.12 billion a month ago as Malacañang imposed the enhanced community quarantine in Luzon on March 16 to limit the spread of COVID-19.
This prompted banks to jack up the allowance of credit losses to P235.78 billion as of end-April, 19.6 percent higher than the P197.17 billion earmarked in the same period last year. This translated to a higher NPL coverage ratio of 93.33 percent from 92.34 percent
For one, BDO Unibank – the country’s largest bank – beefed up its war chest versus bad loans to a record P22.1 billion in anticipation of the expected disruptive economic impact of the outbreak.
Other big banks that earmarked higher provisions in the first quarter include Security Bank with P5.7 billion, Metropolitan Bank & Trust Co. with P5 billion, Bank of the Philippine Islands with P4.23 billion, Philippine National Bank with P3.4 billion, Rizal Commercial Banking Corp. with P1.6 billion, Union Bank with P1.3 billion, among others.
The BSP data showed the NPL ratio of universal and commercial banks increased for the fourth straight month to 1.91 percent as of end-April from 1.56 percent a year ago, while the NPL ratio of thrift or mid-sized banks improved to 5.58 percent from 5.81 percent.
BSP Governor Benjamin Diokno said earlier the country’s banking system is in a strong financial position and capable of managing the crisis even if the NPL ratio is increased to five percent.
“We have prepared our banking system well,” Diokno said.
Source: https://www.philstar.com/business/2020/06/10/2019774/banks-bad-loans-surge-p253-billion