THE proportion of nonperforming loans (NPLs) of Philippine banks to their total loans settled at 3.51 percent in June this year, data released by the Bangko Sentral ng Pilipinas (BSP) on Friday showed.
The NPL ratio during the month was slightly lower than the 3.57 percent recorded in May this year.
It was, however, higher than the 3.43 percent seen in June last year.
BSP data showed that the gross nonperforming loans amounted to P502.4 billion, up from the P495.6 billion in May this year and the P437.6 billion recorded in June 2023.
In a Viber message, Rizal Commercial Banking Corp. chief economist Michael Ricafort said the NPL ratio improved in June but was still among the highest in nearly two years amid the recent double-digit growth in loans that increased the denominator and led to the easing of the NPL ratio.
“Further recovery of many businesses since the final lifting of the [coronavirus disease 2019] state of public health emergency for more than year already or no more Covid-related restrictions since July 22, 2023 also helped eased the NPL ratio and further increased the demand for loans to fund more investments for new businesses and for expansion projects,” Ricafort said.
He said the NPL was still among the highest in two years due to higher interest rates that made borrowing costs more expensive over the past two years.
“However, possible Fed (US Federal Reserve) and local policy rate cuts later in 2024 up to 2026 could help reduce borrowing costs and would also help further improve business and overall economic conditions that would help further reduce NPL ratio, going forward,” he said.
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