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KB NPLs Inch Up in May

07.16.2001

As of month-end May 2001, the Non Performing Loans (NPL) ratio inched up to 16.81 percent from 16.76 percent (amended figure) in April 2001 as the P787 million or 0.3 percent rise in NPL outpaced the P195 million or 0.01 percent rise in Total Loan Portfolio (TLP). Net of interbank loans (IBL), NPL ratio also deteriorated to 18.40 percent from last month’s 18.23 percent.

NPL ratio of all groups followed an uptrend from previous month’s 18.62 percent, 19.73 percent and 3.62 percent to 18.67 percent, 19.94 percent and 3.77 percent this month for Expanded Commercial Banks (EKBs), Non Expanded Commercial Banks (NEKBs) and Foreign Banks (FXBs), respectively. The hike in NPL ratio this month was influenced mainly by combined increments in NPLs of both NEKBs and FXBs of P1.6 billion and the huge loan cut of P7.6 billion of EKBs.

This month’s NPL coverage ratio (Loan Loss Reserves to NPLs) improved to 44.2 percent from 42.7 percent last month as the incremental cover for loan losses of 3.7 percent (P4.2 billion) outpaced the 0.3 percent (P787 million) hike in NPLs. Consistently, FXB’s coverage ratio topped at 126.1 percent compared to EKBs’ 42.2 percent and NEKBs’ 37.9 percent.

Gross restructured loans (RL) which increased by 0.5 percent from P100.5 billion to P101.0 billion, overtook the 0.01 percent rise in TLP, pushing up RLs to 6.41 percent of TLP from last month’s 6.38 percent.

Holdings of foreclosed collaterals, i.e., Real and Other Properties Owned and Acquired (ROPOA gross) rose by 1.3 percent to P137.5 billion from last month’s P135.7 billion while total assets declined by P6.7 billion or 0.2 percent. This raised ROPOA to 4.6 percent of total assets from 4.5 percent last month. ROPOA also slightly increased to 8.02 of ROPOA plus TLP from last month’s 7.93 percent.

The P6.7 billion or 0.2 percent reduction in total assets and the accompanying hike of 0.6 percent in non-performing assets (NPLs plus gross ROPOA) weighed down on the industry’s overall asset quality as measured by the non-performing asset (NPA) ratio (NPL plus ROPOA gross/total assets) which inched up to 13.4 percent from 13.3 percent last month.

Using another broad definition of loan quality, the ratio of NPL plus current restructured loans plus gross ROPOA to TLP plus ROPOA also deteriorated to 27.1 percent from 26.9 percent last month and last year’s 23.4 percent.

This month’s NPA provision (loan loss reserves plus provision for ROPOA) rose from P117.7 billion to P122.0 billion. Consequently, NPA coverage ratio (NPA provisions divided by NPAs) improved to 30.3 percent from 29.4 percent last month as the 3.6 percent rise in NPA provisions outpaced the 0.6 percent rise in NPAs.

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