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NPL Ratio of Universal and Commercial Banks' Improves to 7.17 Percent

09.12.2006

The non-performing loan (NPL) ratio of universal and commercial banks (U/KBs) sustained its improvement with a 0.06 percentage point reduction to 7.17 percent as of end-July 2006 from 7.22 percent last month.  Year-on-year, this month’s ratio was 2.37 percentage points lower from the base figure of 9.54 percent ratio.

The movement in this month’s ratio was a result of the simultaneous 0.15 percent drop in NPLs and 0.64 percent expansion in total loan portfolio (TLP).  As a result of banks’ continued efforts to reduce problem loans, NPLs went down to P136.33 billion from P136.53 billion at end-June 2006.  At the same time, TLP grew to P1,902.65 billion from P1,890.57 billion.

Exclusive of interbank loans (IBL), the industry’s NPL ratio likewise improved to 8.54 percent from the previous month’s 8.71 percent and year ago’s 11.34 percent.  The month-on-month development came along with a 1.78 percent increment in regular lendings to P1,595.39 billion.

The restructured loans (RLs) to TLP ratio of the industry slid to 5.07 percent from last month’s 5.11 percent with the rise in TLP accompanying the 0.14 percent contraction in total RLs.  Meantime, the non-performing RLs to total RLs ratio eased to 46.01 percent from last month’s 46.72 percent as non-performing RLs declined at a faster pace of 1.64 percent.

For the month, real and other properties acquired (ROPA), gross favorably declined by 0.64 percent to P191.17 billion.  However, with a greater contraction in gross assets (GA), the ratio of ROPA, gross to GAs inched up to 4.62 percent from last month’s 4.61 percent.  Nonetheless, this month’s ratio is still better by 0.31 percentage point than year ago’s 4.93 percent ratio. 

The non-performing assets (NPA) of the industry had gone down by 0.49 percent to P317.74 billion from P319.29 billion last month.  In spite of this development, the NPA ratio marginally rose to 7.72 percent from last month’s 7.69 percent with a sharper 0.85 percent reduction in GAs.  Still on a year-on-year comparison, this month’s NPA ratio is considerably better by 1.39 percentage points from the base figure of 9.11 percent. 

The industry’s NPL and NPA coverage ratios slightly trimmed to 80.66 percent (from 80.97 percent last month) and 40.94 percent (from 40.96 percent).  Month-on-month, loan loss reserves (LLR) narrowed by 0.53 percent while NPA reserves fell by 0.55 percent. At end-July 2006, LLRs and NPA reserves stood at P109.95 billion and P130.07 billion, respectively.

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