Thrift banks post higher NPLs in January

SOURED DEBTS held by thrift banks climbed in January to outstrip the growth in total lending, central bank data showed, just as consumer credit maintained double-digit expansion.

Non-performing loans (NPLs) held by these lenders totalled P44.561 billion as the year opened, up by 16.4% from the P38.29 billion in January 2017 and the P26.929 billion in unsettled loans as of end-December.

NPLs refer to debts left unpaid for at least 30 days past due date. These are considered as risky assets due to a high risk of default that would spell losses for the bank.

The growth in NPLs outpaced an 8.7% increase in overall lending, with thrift banks holding a cumulative loan portfolio of P860.144 billion from P791.12 billion tallied a year prior.

The bad debts took a 5.18% share in loan balances, rising from a 4.84% share in January and from 4.7% at end-2017.

Meanwhile, non-performing assets held by thrift banks steadied at P22.24 billion, representing the value of land and other assets of value seized from non-paying clients. Banks have the option to acquire properties posted as collateral in the event that a borrower fails to settle one’s dues.

Despite the increase in the amount of problem loans, thrift banks kept reserves for potential loan losses at P27.178 billion, barely changed from the P27.115 billion allowance set aside the previous year. The amount can cover just 61% of the bad debts, lower than the 70.8% coverage ratio logged in January 2017.

Consumer lending posted a 20.3% growth in January led by a pickup in credit card loans, according to central bank data.

On the other hand, the banks also saw a 6.1% rise in deposits, which amounted to P934.547 billion from P880.434 billion. This meant that 92.04% of these deposits have been deployed for lending.

There were 55 thrift lenders operating in the Philippines as of December.