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Thrift Banks' NPL Ratio Eases to 7.68% in February

04.30.2007

The thrift banking industry’s non-performing loans (NPL) ratio as of end-February 2007 eased to 7.68 percent from the previous month’s 8.03 percent, or a month-on-month difference of 0.35 percentage point. On a year-on-year basis, the current NPL ratio is a 1.23 percentage points improvement from the reference ratio of 8.91 percent.

The 2.57 percent decline in NPLs, coupled with the modest 1.85 percent growth in total loan portfolio (TLP), drove this month’s ratio down. All in all, the industry was able to sustain a single-digit NPL ratio for the past 23 months now.

Exclusive of interbank loans (IBL), the industry’s NPL ratio likewise improved to 9.02 percent from last month’s 9.27 percent. This transpired as core lending inched up by 0.18 percent (or P0.40 billion) to P227.72 billion. This month’s ratio is also better than year ago’s 9.56 percent ratio.
 
Restructuring activities picked up by 0.87 percent during the month of February. Yet, the proportion of RLs to TLP went down to 2.09 percent from last month’s 2.11 percent as the increase in TLP outpaced the marginal increment in RLs. Likewise, this month’s ratio is lower by 0.78 percentage point from year ago’s 2.87 percent ratio.

Meantime, the ratio of real and other properties acquired (ROPA) over gross assets (GA) remained at 7.54 percent. The equilibrium transpired as the two variables grew at almost the same pace. On the other hand, this month’s ratio is an improvement by 1.24 percentage points from year ago’s 8.78 percent ratio.

The non-performing assets (NPA) ratio improved to 10.97 percent from last month’s 11.08 percent as NPAs shrunk by 0.74 percent to P51.84 billion. Year-on-year, this month’s ratio is 1.55 percentage points better than the base figure of 12.52 percent.

Meanwhile, the NPL coverage ratio slid to 49.90 percent (vs. 51.96 percent last month). This was driven by the 6.42 percent contraction in LLRs to P10.25 billion. Nonetheless, the NPL coverage ratio showed significant enhancement from the 46.77 percent ratio posted a year ago.

The NPA coverage ratio settled to 25.65 percent (vs. 26.61 percent in January). Quite the opposite, this month’s ratio was comparatively stronger than year ago’s 23.59 percent ratio. As of end-February 2007, NPA reserves stood at P13.30 billion.

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