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THE Philippine banking system’s net income declined by 13 percent in the first quarter of the year, according to the data released by the Bangko Sentral ng Pilipinas (BSP).
Preliminary data showed on Monday that the industry’s P48.44-billion net income in January to March was down from the P55.68 billion in the same period of 2020.
Total operating income declined by 15 percent to P185.37 billion from P220.51 a year ago while losses amounted to P17.38 billion down by 30 percent from the P25.11 billion recorded a year ago.
Banks’ provision for credit losses on loans and other financial assets went down by 19 percent to P20.61 billion from P25.75 billion.
Lenders wrote off P3.42 billion in bad debts in the first quarter, 197-percent bigger than the year-earlier P1.15 billion.
Central bank data also revealed that banks’ gross non-performing loans (NPL) ballooned to P448.59 billion at end-March, climbing by 80 percent from P249.18 billion a year earlier.
NPLs are past due loans where the principal or interest is unpaid for 30 days or more after the due date. This includes the outstanding balance of loans payable in monthly installments when three or more installments are in arrears.
The data also showed that banks’ total loan portfolio shrank by 3.9 percent to P10.65 trillion from P11.09 trillion.
This translated to a gross NPL ratio of 4.21 percent, up from the 4.08 percent a month ago and the 2.25 percent a year earlier.
This ratio is the share of bad loans to total loans, inclusive of interbank loans.
In a comment, Rizal Commercial Banking Corp. (RCBC) Chief Economist Michael Ricafort said the drop in banks’ net income could be attributed to coronavirus disease 2019 (Covid-19) pandemic that slowed down demand for loans, increasing provisioning amid higher NPL ratio of the banking industry as the 60-day extension of loan payments already ended under the Bayanihan to Recover As One Act up at the end of 2020.
“The US/global bond market sell off especially from January-February 2021 also partly caused a drag on the huge trading gains seen in recent months,” said Ricafort.