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Commercial Bank NPLs Improve in September 1999

11.16.1999

The quality of the loan portfolio of the country’s 52 commercial banks improved significantly as of end-September 1999 as non-performing loans (NPLs) dropped to 13.40 percent of total outstanding loans from 14.36 percent in August. NPL declined by P7.4 billion or 3.4 percent even as total loan portfolio (TLP) increased by P52.7 billion or 3.5 percent. NPL and TLP leveled at P208.6 billion and P1,557,1 billion, respectively.           

All commercial bank sub-groups posted lower loan delinquency levels during the period under review: expanded commercial banks; non-expanded commercial banks; and branches of foreign banks.            

This month’s NPL coverage ratio (loan loss reserves (LLR) divided by NPL) also improved to 36.5 percent from 35.5 percent last month largely as a result of the sizable contraction in NPLs.            

The sharp decline in the industry’s NPL bolstered over-all asset quality as this trimmed down non-performing assets (NPA), i.e., the sum of NPLs and net ROPOA, by 1.5 percent to P284.9 billion from P289.3 billion a month earlier.  At the same time, total asset levels moved up by P76.8 billion or 3.0 percent. As a result, the ratio of NPA to total assets improved to 10.8 percent from the previous month’s 11.3 percent.  

“The significant improvement in commercial  banks’ asset quality indicators is a very welcome development. We expect this trend to continue in the coming months as banks build up further their loan books and as bad loans are worked out,” Governor Buenaventura said.

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