Non-performing loans of thrift banks increase

BAD LOANS held by thrift banks increased in April from a year ago, rising faster than the growth in total credit granted by the lenders, according to central bank data.

Non- performing loans — or debts left unpaid at least 30 days past due date — held by thrift banks stood at P35.321 billion, 29.1% higher than the P27.367 billion worth of soured debts incurred in April 2015 and picking up from the P34.346 billion posted a month ago.

This outpaced a 17.1% climb in banks’ total loan portfolio from P712.753 billion to P608.493 billion, data from the Bangko Sentral ng Pilipinas (BSP) showed.

Non- performing assets held by thrift banks, which represent seized assets from defaulting clients, also rose by more than a fifth to P57.95 billion from P47.409 billion.

Unlike the bigger universal and commercial banks, thrift banks are focused on lending to individual consumers.

Relative to total bank loans, the share of bad debts also rose to 4.96% from a 4.5% ratio posted a year earlier. Coverage for soured loans also slipped to just 72% from 74.41% previously as the amount of non- performing loans increased.

However, the banks hiked their allowance for credit losses to P25.433 billion in April, nearly a fourth higher than the P20.363 billion which was set aside during the previous year. In particular, the lenders increased the share of its reserves against potential defaults to 3.57% of total loans, higher than last year’s 3.35% loan loss reserve ratio.

The BSP tracks the NPL ratios of banks and financial entities to monitor asset quality, in keeping with its mandate of keeping a sound and stable banking system.

Thrift banks remained profitable as of end- March to book P2.964 billion in net income, rising from P2.799 billion booked during the same period last year.

There are 66 thrift banks operating in the Philippines as of March operating 2,064 branches nationwide, according central bank data.