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Universal and Commercial Banks' NPL Ratio Eased to 7.16 Percent

12.18.2006

As of end-October 2006, the non-performing loans (NPL) ratio of the universal and commercial banks (U/KBs) further improved to 7.16 percent from last month’s 7.43 percent and year ago’s 9.65 percent ratio. 

Over the month, the 0.63 percent reduction in NPLs was complemented by the 3.15 percent growth in total loan portfolio (TLP).  The industry’s NPLs came down to P142.20 billion from P143.10 billion last month.  During the same period, TLP expanded to P1,986.07 billion from P1,925.42 billion. 

Net of interbank loans, the NPL ratio likewise improved by 0.34 percentage point to 8.62 percent from 8.96 percent last month with regular lendings rising by 3.33 percent to P1,649.63 billion.  On a year-on-year reckoning, this month’s ratio is even much better by 2.89 percent than the double-digit base figure of 11.51 percent. 


The industry’s ratio of restructured loans (RLs) to TLP declined by 0.21 percentage point to 4.75 percent from 4.96 percent the previous month.  This developed with the simultaneous 1.02 percent cut in RLs and growth in TLP.     Meantime, non-performing RLs to total RLs ratio spiked by 10.04 percentage points to 57.24 percent from 47.20 percent last month on the back of a 20.06 percent hike in non-performing RLs.   

Real and other properties acquired (ROPA), gross to gross assets (GA) ratio of U/KBs slid by 0.06 percentage point to 4.39 percent from 4.45 percent last month with a faster growth in GAs than the 0.81 percent increase in the stock of ROPA.  Over the month, U/KBs accumulated P186.47 billion of ROPA, up from last month’s P184.97 billion. 

The industry’s non-performing assets (NPA) ratio continued its positive downtrend, narrowing by 0.18 percentage point to 7.50 percent from 7.68 percent last month.  This was fueled by the 0.41 percent shrinkage in NPAs with the simultaneous 2.05 percent uptrend in GAs.  Year-on year, this month’s ratio is even better by 1.82 percentage points than the base figure of 9.32 percent. 

Meantime, the industry’s NPL and NPA coverage ratios shed 2.94 percentage points and 1.38 percentage points, respectively.  The paring of the industry’s NPL coverage ratio was caused by the 4.18 percent drop in LLRs, which far outpaced the 0.63 percent decline in NPLs.  The same was true for the NPA coverage ratio, the faster 3.62 percent drop in NPA reserves countered the 0.41 percent cut in of NPAs.  As of end-October 2006, LLRs and NPA reserves amounted to P112.93 billion and P131.43 billion, respectively.

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