PHILIPPINE banks' nonperforming loan (NPL) ratio declined to 3.39 percent in March, data from the Bangko Sentral ng Pilipinas (BSP) showed.

The figure was down from February's 3.44 percent but higher from the year-earlier 3.33 percent.

Bad loans plunged to P464.67 billion in March compared to P466.11 billion in the previous month. Year on year, it rose from P414.98 billion.

The central bank defines NPLs as past-due loans where the principal or interest is unpaid for 90 days or more after the due date, including the outstanding balance of loans payable in monthly installments when three or more installments in arrears.

The BSP data showed that past-due loans rose to P588.45 billion from P584.23 billion in February. These accounted for 4.30 percent of total loans, slightly lower than the previous month's 4.31 percent.

Year on year, past-due loans were at 4.08 percent of the total at P508.46 billion.

Restructured loans, meanwhile, rose to P294.53 billion from P292.08 billion. This brought it to 2.15 percent of banks' gross loan portfolio.

In March last year, restructured loans were higher at P322.87 billion or 2.59 percent.

Lenders' loan loss reserves edged down to P467.76 billion, equivalent to 3.42 percent of total loans. This was lower than 3.50 percent seen in the same month last year.

The NPL coverage ratio — which indicates banks' allowance for potential losses due to bad loans — was also lower at 100.66 percent from 105.23 percent last year.

Sought for comment, Rizal Commercial Banking Corp. chief economist Michael Ricafort mentioned that as the economy reopened and moved toward normalcy, bad loans decreased slightly due to improved financial conditions for borrowers, including higher sales, profits, employment, and other business opportunities.