Robust banks seen outlasting crisis
The BSP noted that banks began recognizing loan loss provisions since the start of the year in anticipation of the impact of the pandemic on their portfolio
The financial system can withstand up to two years of disruptive challenges from the pandemic, the Bangko Sentral ng Pilipinas (BSP) said.
Data obtained by the Daily Tribune from the BSP Supervisory Policy and Research Department (SPRD) showed the majority of respondents to a survey among local lenders indicated that bankers expect economic recovery to occur in the next six months to two year period.
“Majority of the respondent banks projected growth between 10 percent and 15 percent in their respective loan portfolios over the next two years,” the SPRD explained.
“Meanwhile, based on key indicators and results of latest BSP stress test exercises, we expect non-performing loans (NPL) to remain within manageable levels and matched with high loan-loss provisions,” it added.
Soured debts higher
Preliminary data from the SPRD revealed gross NPL ratio climbing to 3.7 percent as of end-January 2021 from the posted 2.2 percent in the same month year-ago.
Nevertheless, the central bank pointed out that such increase was matched by higher loan loss provisions with NPL coverage ratio of 94.6 percent versus only 91.6 percent in the same comparable period.
“The BSP noted that banks began recognizing loan loss provisions since the start of the year in anticipation of the impact of the pandemic on their portfolio,” it explained.
Still, the banking regulator observed a modest expansion in the banking system’s assets as of end-January 2021 with 5.6 percent growth to P19.2 trillion.
“Loans, which constituted 55.3 percent of the banking system’s resources, contracted by 2.5 percent YoY to P10.6 trillion, slower than the 9.8 percent growth rate a year ago,” the SPRD said.
“Nevertheless, as consumer and business confidence recovers, and subsequently, economic activity picks up on account of the relaxation of the lockdown protocols, vaccine rollout and fiscal measures, lending growth is anticipated to follow,” it added.