Banks NPL ratio falls to 1-year low

MANILA, Philippines – The proportion of non-performing loans (NPLs) of Philippine banks to their total loans fell to a one-year low of 3.27 percent in December last year.

Recent data from the Bangko Sentral ng Pilipinas (BSP) showed that the NPL ratio was the lowest recorded since 3.24 percent in December 2023.

In November 2024, the NPL ratio settled at 3.54 percent.

READ: Bad loans hit 2-mo low

BSP data showed that the gross non-performing loans amounted to P500.32 billion, higher than the P449.06 billion in December 2023.

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It was, however, lower than the P520.48 billion in November last year.

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In a Viber message Thursday, Rizal Commercial Banking Corporation chief economist Michael Ricafort said the lower NPL ratio during the month could be attributed to the further recovery of businesses.

“The improvement may also be attributed to lower BSP rates in 2024 to a two-year low of 5.75 percent and lower Fed rates,” he said.

The BSP last year reduced policy rates by a total of 75 basis points.

“Going forward, further monetary easing in terms of local rate cuts and RRR (reserve requirement ratio) cuts could help further ease NPL ratio,” Ricafort said.