Manufacturing sector reports highest nonperforming loans in 2020
● Manufacturing sector NPL ratio hits 8.7% ● Overall banking sector NPL ratio at 4.7%
While the overall asset quality in the banking sector improved sharply, despite the worst predictions and pandemic-related headwinds, the loans to the manufacturing sector reported the highest non-performing loans (NPLS) compared to the other key sectors of the economy.
According to the preliminary data coming from the licensed commercial banks on their asset quality— identified based on various economic sectors to where they channelled loans— the manufacturing sector came on top, with an 8.7 percent nonperforming loans ratio, indicating nearly 9.0 percent of loans into the sector were in arrears for 90 days or more by end-2020.
The licensed commercial banking sector overall reported a gross non-performing loans ratio of 4.7 percent by end-2020, a tad weaker from 4.6 percent a year ago but much improved from 5.3 percent when the problem reached a peak in June 2020, the quarter which was mostly damaged by the pandemic. he growing amount of loans into the manufacturing sector would have also played a role in the sector’s non-performing loans appearing larger than the rest, as there was a concern until very recently on the lack of loans being channelled into the sectors deemed as priority, among which manufacturing is key.
The Monetary Board in March highlighted the lack of credit to the productive sectors of the economy to support the domestic production economy, which is at the heart of the government’s economic policy.