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Thrift Banks' NPL Ratio Eases to 8.25% in December

02.22.2007

The thrift banking industry’s non-performing loans (NPL) ratio as of end-December 2006 eased to 8.25 percent from the previous month’s 8.44 percent, or a month-on-month difference of 0.19 percentage point. On a year-on-year basis, the current NPL ratio is a 0.61 percentage point improvement from the reference ratio of 8.86 percent.

The 2.71 percent increase in total loan portfolio (TLP), as opposed to the negligible 0.42 percent buildup in NPLs, drove this month’s ratio down. All in all, the industry was able to sustain a single-digit NPL ratio for the past 21 months now.

Exclusive of interbank loans (IBL), the industry’s NPL ratio got better to 9.35 percent from the previous month’s 9.40 percent but registered higher than last year’s 9.30 percent. The month-on-month movement came about as TLP (net of IBL) rose at a faster pace of 0.89 percent than the hike in NPLs.

Progress in the settlement of restructured loans (RLs) continued, with said account contracting from last month by 4.60 percent and by 9.35 percent from last year. Thus, the proportion of RLs to TLP dropped to 2.24 percent from last month’s 2.41 percent and last year’s 3.20 percent ratio.

Meantime, the ratio of real and other properties acquired (ROPA) over gross assets (GA) went down to 7.81 percent from last month’s 8.19 percent. This transpired as the stock of foreclosed assets was chipped by 0.67 percent. Likewise, this month’s ratio is an improvement by 1.12 percentage points from last year’s 8.93 percent ratio.

The non-performing assets (NPA) ratio improved to 11.36 percent from last month’s 11.89 percent as the moderate 4.27 percent expansion in GAs coincided with the 0.36 percent shrinkage in NPAs. Year-on-year, this month’s ratio is 1.17 percentage points better than the base figure of 12.53 percent.

Meanwhile, the NPL coverage ratio tapered to 49.33 percent (vs. 50.19 percent last month). This was driven by the 1.30 percent contraction in loan loss reserves (LLRs) to P10.14 billion. Meantime, the NPL coverage ratio showed significant enhancement from the 47.92 percent ratio posted last year.

The NPA coverage ratio settled at 25.62 percent (vs. 26.05 percent in November). Quite the opposite, this month’s ratio was comparatively stronger than the 23.41 percent ratio posted last year. As of end-December 2006, NPA reserves stood at P13.21 billion.

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