New York-based S&P sees the bad debts of Philippine banks falling this year as the the country’s economy is expected to grow 7.4 percent.
“By our estimates, the NPL (non-performing loans) ratio will decline from its peak of 4.5 percent. This is because most stressed loans have either been recognized or restructured,” said Nikita Anand, primary analyst at S&P.
“Some slippage is possible from the restructured pool, especially from the service sector,” she added.
Anand said the implementation of Republic Act 11523 or the Financial Institutions Strategic Transfer (FIST) Act would also help trim the sector’s bad debts.
“Banks’ disposal of NPLs to asset-management companies could bring down the level of stressed loans visible in the system,” Anand said.