Banks’ NPL ratio hits two-month low in Nov.

The share of non-performing loans (NPLs) in total loans of Philippine banks fell to a two-month low in November 2024, according to data from the Bangko Sentral ng Pilipinas (BSP) released last week.

The NPL ratio in November stood at 3.54 percent, a slight decline from 3.60 percent in October 2024. This marked the lowest ratio since September 2024, when it was at 3.47 percent.

However, the NPL ratio in November 2024 was higher compared to 3.41 percent in the same month in 2023.

The total gross non-performing loans amounted to P520.53 billion, down from P524.31 billion in October 2024, but still above P454.28 billion recorded in November 2023.

Economist Leonardo Lanzona from Ateneo de Manila University noted that the decline in the NPL ratio was likely a “market correction” following the high NPL rates in October. 

Lanzona also pointed out that the BSP may moderate its interest rate easing policy due to rising inflationary pressures and declining housing prices, which have led to reduced investment in real estate.

“Because of these factors, banks and investors have been more cautious,” he added.