Thrift banks’ NPLs up at end-June

SOURED DEBTS held by thrift banks continued to climb in June to take a bigger share in loans for retail borrowers, latest central bank data showed.

Non-performing loans (NPLs) granted by these thrift lenders reached P46.664 billion by the end of the first semester, rising from the P46.067 billion in May. The stash of bad debts also jumped by 16.2% from the P40.153 billion incurred in June 2017, according to the Bangko Sentral ng Pilipinas (BSP).

NPLs refer to unsettled debts for at least 30 days past due date and are considered as risky assets due to a high risk of default that could spell losses for a bank. Having a lower share of bad debts means a bank is in better shape.

The surge in bad loans even outpaced the 10.4% growth in credit lines incurred during the period, with the total rising to P885.385 billion from P802.118 billion a year ago.

The NPLs took a 5.27% share relative to the banks’ total loan portfolio, higher than the 5.01% ratio posted in June 2017.

Thrift banks target individual borrowers and small-scale firms, which are deemed to be riskier segments compared to corporate clients. Consumer lending grew by 19.1% in June coming from 19.9% the previous month, according to BSP data.

These problem loans also grew faster than the thrift banks’ buildup of deposits, which posted a measly 3.2% increase to reach P963.758 billion. In turn, the loans-to-deposits ratio clocked in at 91.87%.

Despite the higher NPL stash, lenders kept their reserves for loan losses barely changed at P27.955 billion compared to P27.751 billion last year. This is enough to cover just 60% of the losses should these loans turn sour and are written off.

Meanwhile, non-performing assets held by thrift banks grew by a tenth to hit P22.829 billion, representing the value of properties and other assets seized from non-paying borrowers.

There are 53 thrift banks operating in the Philippines which booked a cumulative P8.026 billion net income from JanuaryJune. This spelled a decline from the P8.174 billion profits they made during the same period in 2017, according to BSP data.

Cost-to-income ratio clocked in at 64.14% for thrift banks, coming from 63.16% tallied a year ago.