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Update on Commercial Banks' NPLs

03.09.2000

The non-performing loan (NPL) ratio of the commercial banking industry rebounded to 13.43 percent in January 2000 from 12.34 percent in end-December 1999.  The increase was not unexpected since a pick-up normally occurs after quarter-ends and especially after year-end.  Nevertheless, the underlying trend remains stable at around 13 percent.

The deterioration in NPL ratio was attributable to the 4.0 percent rise in NPLs and the 4.4 percent simultaneous contraction in total loan portfolio (TLP). NPLs and TLP leveled at P203.2 billion and P1,513.0 billion, respectively.

Despite the increase in industry’s loan loss reserves (LLR) to P94.0 billion from P91.0 billion last month,  NPL coverage ratio (LLRs divided by NPLs) slightly receded to 46.3 percent from last month’s 46.6 percent.  This resulted as the growth in NPLs of 4.0 percent outstripped the additional cover for LLRs of 3.3 percent.

Overall asset quality slightly deteriorated as ratio of NPAs (NPLs + net ROPOA) to total assets increased to 11.5 percent from 10.7 percent a month ago, as a result of the 3.2 percent  increase in NPAs even as total assets decreased by 4.5 percent.  NPAs and total assets stood at P303.1 billion and P2,633.8 billion, respectively.

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