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KB NPL Ratio Drops in September

11.09.2001

The Non-Performing Loans (NPL) ratio of the 44 commercial banks operating in the country dropped to 17.92 percent in September 2001, 0.11 percentage points lower than the 18.03 percent in August 2001, influenced to a large extent by uptick in lending activities of more than a majority of the banks. This is shown by the P14.7 billion or 0.94 percent growth in total loan portfolio (TLP) which completely offset the 0.34 percent or P957 million rise in NPLs. In contrast, NPL to TLP (net of interbank loans (IBL) ratio moved up to 20.09 percent from 19.93 percent last month as the 14.3 percent or P21.2 billion increase in IBLs surpassed TLP growth during the period.

Loan expansion during the quarter was largely traced to increments posted by Private Domestic Expanded Commercial Banks (EKBs) (P13.73 billion) and Foreign Branches (P6.10 billion). Whereas the hike in NPLs was likewise traced to higher NPL levels of Private Domestic EKBs (P2.53 billion) and of Foreign Branches (P386 million) which were partially offset by the reduction in NPLs of Other Private KBs (P1.64 billion) and Government Banks (P321 million).

Coverage ratio (Loan Loss Reserves to NPLs) inched down to 43.49 percent from 43.62 percent last month, as the loan loss reserves increase of only P60 million or 0.05 percent fell short of the P957 million or 0.34 percent rise in NPLs.

Gross restructured loans (RLs) moved up by 1.35 percent for an equivalent share of 6.96 percent of TLP (from 6.93 percent last month).

Increase in holdings of Real and Other Properties Owned/Acquired (ROPOA) (gross) by 0.76 percent to P148.7 billion from last month’s P147.6 billion was closely matched by 0.66 percent growth in gross assets (total assets plus loan loss reserves plus provision for ROPOA). ROPOA to gross assets thus remained at 4.73 percent.

Overall asset quality as measured by the Non-Performing Asset (NPA) ratio slightly improved to 13.71 percent from 13.73 percent last month as 0.66 percent rise in gross assets overtook 0.49 percent hike in non-performing assets (NPL plus gross ROPOA).

Reserves for NPAs, i.e., loan loss reserves plus provision for ROPOA, lowered by 0.06 percent even as NPAs rose by 0.49 percent. This trimmed down NPA coverage ratio (NPA reserves divided by NPAs) from 30.30 percent last month to 30.13 percent this month.

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