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Big banks’ NPLs rise in March

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BAD DEBTS held by big banks posted a modest increase in March even as lending surged to hit nearly P8 trillion, latest central bank data showed.

Non-performing loans (NPLs) held by universal and commercial banks posted a minimal increase to P104.4 billion, 4.7% higher than the P99.712 billion posted in March 2017. The figure even dropped from P106.4 billion in unsettled credit lines as of February, according to data from the Bangko Sentral ng Pilipinas (BSP).

NPLs refer to loans left unpaid at least 30 days past due date. These are considered as risky assets given the slim chance of borrowers actually settling their outstanding balances, which would spell losses for the lender.

The modest increase in problem debts came as total loans jumped by 18.4% to hit P7.997 trillion, coming from P6.751 trillion of outstanding debts a year ago.

Soured debts accounted for just 1.31% of the bank’s total loan portfolio, improving from a 1.48% share the previous year.

Despite the slight rise in NPLs, banks built up additional buffers to cover potential losses to P159.597 billion in March, 15.2% higher than the P138.546 billion they set aside as reserves the year prior. The amount is enough to cover 1.5 times the NPL stash, providing comfort to the financial footing of these big banks.

Meanwhile, other non-performing assets held by the lenders slipped to P76.146 billion. This includes real property and other items of value which were seized from clients for failing to pay their dues.

Banks also stood liquid as they accepted more deposits, with the sum rising by 13.4% to hit P10.861 trillion from P9.579 trillion a year ago. Loans took 73.62% of the deposit base, higher than the 72.7% share recorded in February and 70.48% in March last year.

Since March 2, the central bank trimmed the reserve requirement on big banks to 19%, effectively unlocking around P90 billion for increased lending activities.

Universal and commercial banks made a cumulative P39.768 billion net income during the first quarter, spelling a 17.8% increase from P33.745 billion profits booked in the same period last year, data showed.

The central bank monitors the NPL ratios of banks and financial firms in order to monitor asset quality and maintain the soundness of the financial system. — Melissa Luz T. Lopez