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Update on Thrift Banks NPLs

07.23.2001

Loan quality of the Thrift banking industry improved as the ratio of Non-Performing Loans (NPLs) dropped to 11.53 percent at end-March 2001 from 12.20 percent a month ago and 12.24 percent last year. This month’s recovery is largely traced to substantial loan growth of P7.68 billion or 5.85 percent in March, which completely diluted P6 million or 0.03 percent increments in NPL. Net of Interbank Loans, NPL ratio likewise dropped to 12.03 percent from 12.74 percent last month. 

 The coverage ratio (loan loss reserves to NPL), however declined from 50.2 percent last month to 49.6 percent as loan loss reserves decreased further by 1.0 percent even as NPLs grew by 0.03 percent. Among the industry sub-groups, Savings and Mortgage Banks (SMBs) coverage ratio topped at 60.7 percent, followed by Private Development Banks (PDBs) at 41.1 percent and Stock Savings and Loan Associations (SSLAs) at 38.6 percent. 

Gross restructured loans (RLs) dropped to P3.4 billion or 2.4 percent of TLP compared to P3.7 billion last month and P2.0 billion last year.  

Moreover, asset quality further weakened as accumulated holdings of Non-Performing Assets [Non-Performing Loans plus Gross Real and Other Properties Owned or Acquired (ROPOA)] grew by 0.4 percent to P37.88 billion this month from P37.73 billion last month outpacing the 0.2 percent hike in total assets. This raised NPA ratio (NPL+ROPOA Gross to Total Assets) from 16.09 percent to 16.13 percent this March, although this would be lower than year ago’s 16.72 percent. The hike in ROPOA gross by P 149.3 million and NPLs by P5.5 million offset the impact of asset expansion of P361.0 million during the period. Thus, this month’s NPA coverage ratio (total provisions to NPA) stood at 23.43 percent compared to 23.58 percent last month and 21.76 percent last year.

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