The average NPL ratio of the country’s 47 operating commercial banks as of June 30, 2000 rose to 14.65 percent of total loan portfolio (TLP) compared to 14.37 percent in May. This was mainly influenced by the 2.5 billion or 1.2 percent rise in the volume of NPLs even as TLP shrunk by P11.2 billion or 0.7 percent.
Despite the higher NPL ratio, the Philippine commercial banks continued to compare favorably against their counterparts in Asia such as Korea, Malaysia and Thailand where the most recent NPL ratios were reported at 16.7 percent, 21.5 percent and 39.7 percent, respectively (Goldman Sachs, June 2000).
Loan loss coverage ratio was upgraded at 45.9 percent (LLR divided by NPL) as the 5.3 percent increment in loan loss reserves (LLR) from P96.1 billion last month to P101.1 billion overtook 1.2 percent hike in NPLs during the period. The BSP has been strictly enforcing its loan loss provisioning requirement consisting of specific loan loss provisions against classified loans and 2.0 percent general loan loss provisions against non-classified loans except new loans. It is aiming to build loan loss reserves to a comfortable buffer of around 50.0 percent.
Gross restructured loans (RL) rose by 1.6 percent from P80.9 billion a month ago to P82.2 billion. RLs represented 5.5 percent of TLP from 5.3 percent last month.
Overall asset quality, as measured by the ratio of non-performing assets (NPL plus net ROPOA) to total assets, deteriorated as the ratio rose to 12.1 percent from previous month’s 11.8 percent. The deterioration in NPA ratio resulted as the 3.1 percent combined increase in NPLs and ROPOA outmatched the 1.3 percent increase in total assets. NPAs and total assets leveled at P329.9 billion and P2,738.6 billion, respectively.