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NPL Ratio of Rural and Cooperative Banks Improves to 11.63 Percent in Third Quarter

02.13.2007

As of end-September 2006, the NPL ratio of the rural and cooperative banks (R/CBs) improved by 0.44 percentage point to 11.63 percent from previous quarter’s 12.07 percent. The lower delinquency ratio came about as the 1.22 percent increase in NPLs was completely diluted by the 5.11 percent rise in total loan portfolio (TLP). However, this quarter’s ratio was still higher by 0.13 percentage point from the 11.50 percent ratio a year ago.

Loan expansion of P3.84 billion primarily catered to the agricultural sector. Said sector for the first nine months of 2006 was observed to have grown by 4.87 percent over the same period in 2005.

R/CBs situated in Mindanao continued to register better  NPL ratio at  9.88 percent  (down from 10.16 percent  last  quarter)  compared  to  those  in  Luzon  and  Visayas,  which  reported 11.70 percent (down from 12.17 percent) and 13.76 percent (down from 14.27 percent), respectively.

The growth in TLP outpaced the 3.31 percent increment in restructured loans (RLs) resulting to improved ratio of RLs to TLP at 1.04 percent from last quarter’s 1.06 percent. This ratio was also 0.24 percentage point better than year ago’s 1.28 percent.

The industry made efforts to lower delinquent loans through foreclosure  as  real  and  other properties acquired (ROPA),  gross  increased by 5.14 percent to P9.42 billion. Consequently, the ratio of ROPA, gross to gross assets rose to 7.28 percent from 7.20 percent.

The non-performing assets (NPAs) ratio eased to 13.73 percent from 14.04 percent last quarter. The 1.60 percent growth in NPAs to P17.68 billion from P17.40 billion was outweighed by the 3.89 percent rise in gross assets.
The NPL coverage widened to 34.33 percent from 33.72 percent last quarter. This came about as loan loss reserves (LLRs) went up by 3.04 percent to P3.15 billion, outpacing the 1.22 percent rise in NPLs.

Meanwhile, the NPA reserves rose by 3.04 percent to P3.43 billion from the previous quarter’s P3.33 billion. This overtook the 1.60 percent growth in NPAs resulting to a stronger NPA coverage ratio at 19.42 percent from 19.15 percent last quarter.

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