Banks’ bad loans rise 4.8% in October

MANILA, Philippines – The soured loans of universal and commercial banks in the country inched up 4.8 percent in October immediately after tropical storm “Ondoy” and typhoon “Pepeng” pummeled major cities and municipalities in the National Capital Region and nearby provinces.

Data released by the Bangko Sentral ng Pilipinas (BSP) showed that the non-performing loans (NPL) of universal and commercial banks stood at P85.33 billion as of end-October from the end-September level of P81.42 billion.

This translated to an NPL ratio of 3.37 percent in October or 0.12 percentage point higher than the eight-month low of 3.25 percent recorded in September.

“This is the 13th consecutive month that the NPL ratio has been below four percent,” the BSP said in a statement.

NPLs refer to past due loan accounts whose principal and/or interest is unpaid for 30 days.

Statistics showed that the industry’s total loan portfolio inched up only 1.1 percent to P2.534 trillion as of end-October from P2.505 trillion as of end-September.

The gross assets of universal and commercial banks amounted to P5.437 trillion as of end-October or P36 billion more than September’s P5.311 trillion, while the industry’s non-performing assets (NPA) reached P222.49 billion or P2.69 billion higher than P219.8 billion a month earlier.

This resulted in an NPA ratio of 4.16 percent as of end-October, from 4.14 percent as of end-September.

Last October, the BSP earmarked P5 billion in special rediscounting budget to help microfinance, small and medium enterprises ravaged by the natural calamities.

The central bank’s Monetary Board decided to allocate additional rediscounting loans as nearly 98 percent of its P60-billion rediscounting budget has already been utilized.

Under the BSP rediscounting facility, banks may borrow from the central bank an amount equivalent to a rediscounted value of the collectible or debt instrument used to back the borrowing. It is intended to help ensure that banks have available funds for lending even when their collectibles have yet to fall due or to be settled.

The BSP has urged banks to lower lending rates after adopting a package of relief measures for banks to enable them to extend assistance to bank customers adversely affected by the natural calamities.

As part of the temporary relief measures, the existing loans of borrowers in affected areas would be excluded from the computation of past due ratios provided these are restructured or given relief.

Furthermore, the general loan loss provision for restructured loans of borrowers in affected areas would be reduced to one percent from five percent. The penalties for delays in the submission of supervisory reports were also suspended.

The central bank also granted a 60-day grace period to settle the outstanding rediscounting obligations as of Sept. 28 with the BSP of all rediscounting banks in the affected areas.

The relief measures would also allow banks to restructure with the BSP the outstanding rediscounted loans of borrowers affected by the calamities. –Lawrence Agcaoili (The Philippine Star)