Connect with us

Hi, what are you looking for?


NPL ratio continues to decline in November


BAD DEBTS held by Philippine banks continued to drop in November, bringing the industry’s nonperforming loan (NPL) ratio to 3.35%, with the Bangko Sentral ng Pilipinas (BSP) governor saying he does not expect a further rise this year.

Based on data from the central bank, soured loans slipped by 0.9% to P408.097 billion in November from P411.632 billion in October. It also declined by 15.3% from P481.879 billion in November 2021.

This brought the November NPL ratio to 3.35%, which fell from 3.41% in October and 4.35% in the same month of 2021. This was also the lowest in 27 months or since the 2.84% print in August 2020.

Loans are considered nonperforming once they remain unpaid for at least 90 days after the due date. They are deemed as risk assets as borrowers are unlikely to settle these loans.

“It’s hard to predict (the trend in NPLs) but I do not expect it to rise (this year). Loans are going up, so the denominator is going up,” BSP Governor Felipe M. Medalla told reporters on the sidelines of a Rotary event on Thursday. 

Data earlier released by the BSP showed outstanding loans extended by universal and commercial banks climbed by 13.7% year on year to P10.64 trillion in November. However, this is slightly slower than the 13.9% expansion in October.

Asian Institute of Management economist John Paulo R. Rivera attributed the decline in NPLs to more income-generating activities and stable employment as the economy recovered from the pandemic.

“This is expected to continue as the economy recovers and approach pre-pandemic level,” Mr. Rivera said in a Viber message.

The unemployment rate eased to 4.2% in November, the lowest in over 17 years, as firms hired more workers ahead of the holiday season. 

Since March last year, Metro Manila and most provinces in the country have been under the most lenient alert level, allowing businesses to operate at full capacity.

Consumers and businesses were also able to pay their loans amid the economic recovery, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort likewise said.

In November, banks’ total loan portfolio rose by 10.1% to P12.20 trillion from P11.08 trillion a year ago.

Past due loans fell by 13.2% to P492.528 billion from P567.512 billion a year earlier. These borrowings are equivalent to 4.04% of the industry’s total loan portfolio, down from 5.12% a year earlier.

Restructured loans fell by 4.9% year on year to P327.760 billion in November, from P344.897 billion in the same month of 2021. This brought the ratio to 2.69% in November, from 3.11% in the year prior.

Meanwhile, banks increased loan loss reserves by 2.7% to P431.501 billion in November, from P419.863 billion in the year prior. With this, the ratio went down to 3.54% from 3.79% in November a year ago.

Lenders’ NPL coverage ratio — which shows the allowance for potential losses due to bad loans — increased to 105.73% from 87.13% a year earlier.

“Further improvement in lending/credit standards also contributed to the improved loan/asset quality of banks, on top of the further reopening of the economy,” Mr. Ricafort said. 

However, he noted that elevated inflation and higher borrowing costs remain “overshadowing challenges” that may affect banks.

The BSP has raised benchmark interest rates by 350 basis points (bps) last year, bringing the overnight reverse repurchase rate to 5.5% to tame inflation.

Inflation rose to a 14-year high of 8.1% in December, bringing the full-year average to 5.8%. This is above the central bank’s 2-4% target for 2022.

BSP officials earlier said Philippine banks’ NPL ratio may peak at 8.2% in 2022.

As of end-December 2021, the ratio stood at 3.97%. — Keisha B. Ta-asan

Your information is secure and your privacy is protected. By opting in you agree to receive emails from us. Remember that you can opt-out any time, we hate spam too!


Editor’s Pick

<?xml encoding=”utf-8″ ??> The exodus of workers from the jobs market over the pandemic has weakened prospects for Britain’s economic growth, the governor of...


Elon Musk talks about his company’s Starlink project at the Mobile World Congress, Barcelona, Spain, June 30, 2021. — BRISA PALOMAR / PACIFIC PRESS/SIPA...


PHILSTAR FILE PHOTO The National Economic and Development Authority (NEDA) has approved seven “high-impact” projects, ranging from agriculture to transportation, the agency’s top official...


Television (TV) advertising is shifting toward addressable TV, a service that allows advertisers to show different ads to different audiences watching the same program,...

Editor’s Pick

<?xml encoding=”utf-8″ ??> Wayne Janse Van Rensburg, Chief Executive of education company Learndirect talks to Business Matters about the inspiration behind their business, which...

Editor’s Pick

<?xml encoding=”utf-8″ ??> Rokt, the global leader in ecommerce technology, is today announcing a new partnership with Oracle Red Bull Racing, the leading Formula...

You May Also Like


COVID-19 has had a significant impact on the mental health of Filipinos across different groups all over the archipelago. From frontline workers, parents balancing...


REUTERS By Luz Wendy T. Noble, Reporter The country’s foreign exchange buffers slightly increased as of end-October as the value of the central bank’s...


BW FILE PHOTO GROSS BORROWINGS by the National Government reached P2.6 trillion as of end-September as it continued to raise funds to respond to...


KARASOLAR.COM TENA, Ecuador — Ecuador’s rainforest Achuar people say their ancestors long dreamed of a “fire canoe” or “electric fish” that would let them...

Disclaimer: Respect, its managers, its employees, and assigns (collectively "The Company") do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

Copyright © 2022 Respect Investment. All Rights Reserved.