The industry’s loan profile improved significantly during the period, both ratio-wise and in absolute amount, as non-performing loans (NPL) declined to 11.8 percent of total loan portfolio from 12.8 percent last month and 18.2 percent a year ago. NPLs were substantially reduced by P1.3 billion or 7.7 percent even as loan portfolio expanded by 0.2 percent or P0.2 billion. Net of IBL, NPL ratio also moved down to 12.1 percent from 13.1 percent. The increased tightening of prudential standards within the industry was further reflected in the marked increase of the NPL coverage ratio (Loan Loss Reserves to NPL) from 40.5 percent last quarter to 44.3 percent.
The upgrading of thrift banks loan quality was also typified by the decline in the level of restructured loans which receded by 0.2 percent or P5.5 million largely brought about by contractions in SMBs’ and SSLAs’ of 4.2 percent and 2.6 percent, respectively. PDBs, meanwhile, posted a 1.7 percent increment.
Overall asset quality was likewise enhanced as the 4.1 percent decline in non-performing assets (NPA) , outmatched the 0.7 percent drop in total assets. The reduction in NPAs (from P36.1 billion to P34.6 billion) was due to the 1.0 percent contraction in ROPOA net and in NPLs by 7.7 percent. ROPOA-net, which declined to P19.2 billion from P19.4 billion last month, stood roughly unchanged at 9.1 percent of total assets.