Bad loans ratio drop to record low, says BSP

The non-performing loans (NPLs) ratio of the country’s banking system improved to 2.45 percent, its best level since just before the 1997 Asian financial crisis, the Bangko Sentral ng Pilipinas said Friday. Lending grew by 18.8 percent, its fastest rate since April 2009, according to the Bangko Sentral ng Pilipinas (BSP) Friday. Most of the bank financing covered the needs of industry sectors or production loans, which in June accounted for 91 percent of total bank lending while the remainder were consumer loans, mostly in the form of credit card receivables, auto loans, and housing loans. The total stock of NPLs plunged from nearly P86 billion in June 2010 to just a little over P74 billion in June 2011. In May 2011 bad loans were recorded at P81.91 billion. In a statement, the BSP also noted that banks issued more loans as evidenced by a 3.46 percent increase in the total loan portfolio to P3.03 trillion. “The industry provided adequate provisioning against potential credit losses," the BSP also said. Reserves for possible loan losses improved to 126.17 percent of the banking system’s stock of bad loans. — ELR/VS, GMA News