As of month-end November 2000, loan quality of commercial banks deteriorated as the NPL ratio rose to 16.23 percent from 15.56 percent in October. The increase was due mainly to the 1.8 percent hike in NPL levels even as Total Loan Portfolio (TLP) dropped by 2.5 percent from last month. As a percentage of TLP net of interbank loans (IBL), NPLs increased to 17.93 percent from the previous month’s 17.47 percent. Despite the creeping increase in NPLs, Philippine banks still fared better than regional counterparts like Korea and Thailand where estimated NPL ratios were reported at 37.3 percent and 43.8 percent, respectively. (Goldman Sachs, December 22, 2000).
All three groups, EKBs, NEKBs, and FXBs, showed higher levels of NPLs and lower TLP, consequently raising their NPL ratios to 17.76 percent, 18.92 percent and 3.88 percent, respectively, from last month’s 17.01percent, 18.12 percent and 3.78 percent.
The industry’s loan loss reserves (LLRs) inched up by 0.4 percent to P105.9 billion, from last month’s P105.5 billion. The coverage ratio (LLRs divided by NPLs), however, was trimmed down to 41.0 percent from last month’s 41.6 percent as the increase in NPLs by P4.5 billion or P1.8 percent outstripped this month’s P376.0 million or 0.4 percent additional provisioning against NPLs. LLRs level further deteriorated to 6.7 percent of TLP.
Gross restructured loans increased by 5.5 percent to P90.5 billion from last month’s P85.8 billion and rose by 31.9 percent from last year’s P68.6 billion.
In contrast to P20.8 billion or 0.7 percent contraction in total assets, holdings of ROPOA (net) rose by P0.969 billion or 0.81 percent to P120.6 billion from P119.6 billion last month and from P80.4 billion a year ago. This subsequently raised ROPOA (net) to 4.1 percent of total assets compared to 4.0 percent and 3.0 percent a month ago and last year, respectively.
The simultaneous growth in NPLs and ROPOA (net) aggregating P5.5 billion weighed down on the asset quality of the industry as this pushed up NPA ratio (NPLs + ROPOA (net) to total assets) to 12.9 percent from 12.6 percent a month ago.