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Update on RB NPL as of Quarter Ended September 30, 2001

12.27.2001

The rural banking system’s non-performing loans (NPL) ratio was lowered to 15.2 percent from 16.1 percent last quarter as a result of the 1.1 percent decrease in NPLs despite the 2.5 percent decline in TLP level. Both RRBs and CRBs posted better performances this quarter as their delinquency ratios moved down to 15.1 percent and 15.5 percent from 16.1 percent and 17.7 percent over the last quarter, respectively.

Moreover, the NPL coverage ratio notably increased to 35.1 percent from 33.0 percent last quarter brought by the 5.2 percent increase in loan loss reserves and 1.1 percent decrease in NPLs. Year ago NPL cover stood at only 25.6 percent.

On the other hand, real/other property owned or acquired (ROPOA – gross) rose to 9.1 percent of total assets from 8.8 percent last quarter as RBs pushed collections more aggressively. Nonetheless, overall asset quality improved as the increase in NPA reserves by 4.8 percent outweighed the 2.0 percent rise in NPAs, boosting NPA coverage ratio to 19.3 percent from 18.8 percent last quarter.

On a regional basis, Western Visayas posted the highest NPL ratio of 19.9 percent and the lowest by CARAGA region at 7.9 percent. Coverage ratio ranged from 29.6 percent (Southern Tagalog) to 67.6 percent (ARMM).

“The improvement in the asset quality of rural banks is noteworthy. Average NPL ratio is steadily declining although it still remains relatively high. No less significant, loan loss reserves have significantly increased. We have been urging rural banks to improve asset management and they have been responding,” Deputy Governor Alberto V. Reyes said.

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