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Rural and Cooperative Banks Post 12.02 Percent NPL Ratio


As of end-March 2006, the rural and cooperative banks (R/CBs) posted a non-performing loans (NPL) ratio of 12.02 percent, higher than the previous quarter’s 10.95 percent and the year ago’s 11.74 percent. The quarter-on-quarter movement came about from a 9.91 percent increase in NPLs as the total loan portfolio (TLP), gross rose by only 0.12 percent. Nonetheless, this end-quarter’s ratio was significantly better by 8.39 percentage points compared to the peak ratio of 20.41 percent posted at end-June 1999.

The NPLs primarily increased in R/CBs in 13 out of the 17 regions of the country. Borrowers’ loan repayments were affected by unfortunate events (i.e., typhoons and low productivity in poultry and commercial fishery) that occurred in the first three months of 2006.

R/CBs situated in Mindanao continued to register better  NPL ratio at  10.18  percent  (down from 10.72  percent  last  quarter)  compared  to  those  in  Luzon  and  Visayas,  which  reported 12.07  percent    (up  from   10.86 percent) and   14.32 percent (up from 11.81 percent), respectively.

Meanwhile, the ratio of restructured loans (RLs), gross to TLP, gross dropped to 1.07 percent from 1.21 percent last quarter as RLs, gross fell by 11.48 percent. The ratio was also lower than the year ago’s 1.15 percent.

Foreclosure proceedings did not intensify in the first quarter of 2006 as real and other properties acquired (ROPA), gross barely changed from the previous quarter’s P8.37 billion. However, with the decline in gross assets, the ratio of ROPA, gross to gross assets rose to 7.12 percent from 7.08 percent last quarter.

With higher level of delinquent loans, the non-performing assets (NPA) ratio of the industry moved up to 14.01 percent from 13.30 percent last quarter. Nevertheless, this quarter’s ratio was still better by 0.12 percentage point than the year ago’s 14.13 percent ratio.

The NPL coverage ratio fell to 34.39 percent from 38.87 percent last quarter.  This resulted from the 2.75 percent reduction in loan loss reserves to P2.97 billion and the 9.91 percent expansion in NPLs.   Similarly, the NPA coverage ratio eased by 1.61 percentage points to 19.75 percent from 21.36 percent last quarter. This developed as NPA reserves dropped by 2.90 percent, accompanied by a 4.99 percent increase in NPAs.  Likewise, this month’s NPA coverage ratio was 0.28 percentage point lower than year ago’s 20.03 percent ratio.

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