Bad loan ratio highest in almost 13 years in May

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Metro Manila (CNN Philippines, July 9) — Banks' bad loans again surged in May, recent data from the Bangko Sentral ng Pilipinas (BSP) showed.

Non-performing loans (NPL) reached ₱479.4 billion in May, representing 4.63% of total loans outstanding, according to the BSP data. This breached the NPL ratio of 4.35% logged in April this year, and the 2.43% in May 2020 when total sour loans hit ₱463.6 billion and ₱262 billion, respectively.

May's ratio was the highest level in almost 13 years. It outpaced the 4.5% figure recorded in September 2008, a year marked by the global financial crisis. During that period, the BSP tallied ₱123.6 billion in bad loans.

An economist cited ongoing challenges posed by the COVID-19 pandemic for the swelling of banks' non-performing loans.

"Borrowers having trouble to keep their businesses afloat are trying their best to stretch their payment terms or refinance their loans," Regina Capital managing director Luis Limlingan told CNN Philippines.

Limlingan also noted that borrowers and lenders alike were compelled to reassess portfolios and short-term strategies with the emergence of new COVID-19 variants, and with no "immediate" end in sight for the global health crisis.

Both economic officials and market watchers have been counting on a speedier, more efficient vaccine rollout, and economic recovery measures to combat the downturn triggered by the pandemic.