MANILA - The non-performing loan (NPL) ratio of Philippine universal and commercial banks went up slightly to 3.49% in July from 3.36% in the month before, according to the Bangko Sentral ng Pilipinas (BSP).

The NPL ratio represents the share of past due loans to the total loans extended by banks.

The BSP said the increase in the NPL ratio was due to the drop in total loans, not a recorded rise in bad debts.

Outstanding loans granted by banks dropped 7% month-on-month to P2.38 trillion in July, offsetting the decline in bad loans.

The BSP said banks' bad loans went down by 2% to P82.88 billion in July from P84.82 billion in June.

Meanwhile, the central bank reported that the amount of restructured loans given by universal and commercial banks amounted to P47.93 billion in July, representing 2% of total loans. This was up from 1.82% in July.

"The loan exposure of banks remained adequately covered," it noted.

The BSP said the NPL coverage ratio of banks, or the proportion of reserves set by banks to cover bad debts, improved to 104.98% in July from 102.33% in June.