MANILA – The Bangko Sentral ng Pilipinas (BSP) said the proportion of non-performing loans (NPLs) of Philippine banks to their total loans settled at 3.57 percent in May this year.
Data released by the BSP late Wednesday showed that the NPL ratio during the month was higher than the 3.45 percent recorded in April this year.
It was also up from the 3.46 percent seen in May 2023.
The gross non-performing loans amounted to PHP495.67 billion, higher than the PHP480.64 billion in April this year and the PHP436.11 billion recorded in May last year.
Rizal Commercial Banking Corporation chief economist Michael Ricafort in a Viber message on Thursday, said the increase in NPL was due to the relatively higher interest rates that increased borrowing costs.
He said the weaker peso exchange rate recently also increased the debt servicing costs of those with U.S. dollar loans.
"Risk of recession in some developed countries after the sharp increase in borrowing costs as triggered by the Russia-Ukraine conflict since February 22, 2024, also slowed down global investments, trade, and other business activities, thereby partly weighing on the sales and profitability of some global industries, with some indirect adverse effects on local businesses especially those part of the global supply chains, thereby partly contributing to the recent pick up in the NPL ratio," he said.
He said in the coming months, possible Fed and local rate cuts would help ease financing costs and would also help spur greater demand for loans and other economic activities, that would eventually help improve the NPL ratio. (PNA)
