ASEAN KEY DESTINATIONS
Philippine banks see lowest NPLs since Asian crisis
Philippine commercial banks’ non-performing loans (NPLs) slipped to 4.17 percent of total loans at the end of May, the lowest since the Asian financial crisis in 1998, partly due to expanded loan portfolios, said Reuters on Friday.
Philippines’ central bank disclosed on Friday that banks’ soured loans edged up 0.6 percent to 96.04 billion pesos ($2.2 billion) at end-May from April while their total loan portfolio climbed 3 percent to 2.3 trillion pesos in May from the previous month’s 2.23 trillion, said Reuters.
Non-performing assets, which are bad loans and real estate foreclosed by banks, made up 5.21 percent of banks’ gross assets at end-May, down from 5.33 percent the previous month and 5.89 percent a year earlier.
The central bank said last month commercial banks’ outstanding loans climbed 15.4 percent in May from a year earlier, the highest since 1998 when loan demand fell and non-performing loans climbed due to the impact of the Asian financial crisis.
The crisis began in 1997 but the full brunt of loan defaults hit the sector the following year.
Philippine banks’ bad loan ratio has improved significantly after the government passed a law that grants incentives such as tax perks to buyers of banks’ soured assets.
Bad loans peaked at 18.8 percent in October 2001 following defaults by corporate borrowers as a consequence of the regional financial crisis.
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