Bank’s NPL ratio to worsen — S&P


Debt watcher S&P Global Ratings on Monday sees the non-performing loan ratio of the Philippine domestic banking industry to increase to 6 percent in 2021 from 3.6 percent at the end of last year, saying lenders are on a long road to recovery from the devastating impact of the COVID-19 pandemic.

S&P’s observation was contained in a report published Monday titled “Philippine Banks: Buffers Won’t Hold If COVID Comes Back.”

S&P Global Ratings credit analyst Nikita Anand said NPLs of local banks would jump in the first quarter of 2021 as loan moratoriums and fiscal support were phased out. “NPLs should peak by the second half if the economic recovery stays on track,” Anand said.

“Philippine banks are on a long road to recovery… Asset quality will deteriorate further in the coming quarters as banks recognize the full brunt of COVID-19 on borrowers,” she said.

Anand said credit costs (a measure of provisioning for bad loans) would stay high at 1.5 percent to 1.8 percent.

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