Banks record lowest NPL ratio in Dec. 2024

The share of non-performing loans (NPLs) in Philippine banks’ total loan portfolio fell to 3.27 percent in December 2024, marking its lowest level in a year, according to the latest data from the Bangko Sentral ng Pilipinas (BSP).

This was the lowest NPL ratio recorded since December 2023, when it stood at 3.24 percent. It also reflected an improvement from the 3.54 percent reported in November 2024.

BSP data showed that gross non-performing loans reached P500.32 billion in December, higher than the PHP449.06 billion recorded a year earlier but lower than the P520.48 billion reported in November 2024.

Rizal Commercial Banking Corporation chief economist Michael Ricafort attributed the decline in NPLs to the continued 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,” Ricafort said in a Viber message on Thursday.

Last year, the BSP reduced policy rates by a total of 75 basis points, easing borrowing costs for businesses and consumers.

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

With expectations of continued policy adjustments, analysts see further improvements in the country’s banking sector, supporting financial stability and economic growth.