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Commercial Banks' NPL Ratio Inched Up in February

05.11.2000

The average NPL ratio as of end-March 2000 of the country’s 52 operating commercial banks rose to 14.06 percent of total loan portfolio (TLP) from 13.79 percent in February.  The P19.6 billion monthly growth in TLP (including interbank loans) equivalent to 1.3 percent lessened the impact of the P6.9 billion or 3.3 percent hike in NPLs.  

Despite the higher NPL ratio, the Philippine commercial banks continued to compare favorably against Asian counterparts such as Korea and Thailand where latest estimated NPL averages stood much higher, at 20.7 percent and 38.6 percent, respectively, based on recent independent survey.  

The NPL coverage ratio (LLR divided by NPL) slightly receded to 44.0 percent from 44.6 percent as the rise in NPLs outmatched the P1.7 billion (1.9 percent) growth in loan loss reserves (LLRs).  

Restructured loans (RLs) as in January remained at 5.1 percent of TLP with the current portion at 67.6 percent of total RLs or P53.2 billion, up by 1.9 percent from month ago level.  

The industry’s overall asset quality weakened as the ratio of NPAs (NPLs plus net ROPOA) to total assets inched up to 11.8 percent from last month’s 11.7 percent.  The P39.6 billion or 1.5 percent growth in total assets helped cushion the asset deterioration recorded during the period caused mainly by the simultaneous increases in NPLs and in holdings of foreclosed collaterals.

“The still limited economic recovery up to this point continues to hamper NPL performance of the commercial banking industry.  Nevertheless, the situation remains generally stable with only minimal changes.  It remains very manageable for our banks especially as we continue to encourage them to build up their capital bases and to consolidate.   We are also satisfied that loan loss provisioning is generally keeping up with NPL developments.  We will ensure that such prudent actions are sustained,” BSP Governor Rafael B. Buenaventura said.  

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