Banks' bad loan ratio eases in November; lending picks up

Banks' bad loan ratio eased at the end of November due to a slight drop in nonperforming loans and a rise in total loans, the central bank said on Thursday. The ratio went down by 0.11 percentage point o 3.26 percent from 3.37 percent in October, and by 0.49 percentage point from 3.75 percent a year earlier, the Bangko Sentral ng Pilipinas (BSP) said in a statement. "This is the fourteenth consecutive month that the nonperforming loan ratio [of commercial and universal banks] has been below four percent," it pointed out. The central bank traced the better ratio to a 0.19-percent cut in bad loans to P85.17 billion, while total loans expanded by 3.18 percent to P2.61 trillion. Excluding interbank loans, the bad loan ratio also improved to 3.74 percent as of November from 3.89 percent in October and the year-ago level of 4.15 percent. This came about as bad loans declined and more loans were issued. The BSP said the industry provided adequate provisioning against potential credit losses. The bad loan coverage ratio strengthened to 109.77 percent from 106.37 percent in October. — Lending growth Meanwhile, lending growth picked up in November as productive sectors of the economy borrowed money from lending institutions, the BSP said. Lending, excluding bank placements in central bank vaults, went up by 6.6 percent from a year earlier, faster than October's growth of 4.7 percent. The central bank noted that with lending activity gaining momentum, prospects for a self-sustainable economic recovery are improving. Outstanding loans of commercial banks, including their placements in BSP vaults, grew by 2.6 percent to P2.3 trillion as of end-November, unchanged from a month earlier. Preliminary data showed that loans for production posted a yearly expansion of 6.7 percent in November, higher than 4.2 percent in the previous month. Growth in consumption loans was broadly unchanged at 3.8 percent, following sustained growth in car and credit card lending, which was offset by the steeper decline in other types of consumption loans, the central bank said. It traced the loan growth to borrowings in the agriculture, forestry, real estate, transportation, power, oil, water, hotel and restaurant, and financial intermediation sectors, whose combined borrowings made up more than half of the total. Meanwhile, the loan decline in the manufacturing sector, which accounted for 14 percent of the total, slowed at 16.7 percent, as exports picked up in November. Construction loans also posted their slowest contraction in seven months at 4.5 percent. — GMANews.TV