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UKB's NPL Ratio at 5.28 Percent Moves Closer to Pre-Crisis Level

05.11.2007

In March 2007, the industry’s non-performing loans (NPL) ratio moved closer to the pre-crisis level of about 4.00 percent as it eased by 0.25 percentage point to 5.28 percent from 5.53 percent last month. This developed as the 4.55 percent drop in NPLs was complemented by the 0.09 percent increase in total loan portfolio (TLP). NPLs fell to P108.70 billion from last month’s P113.87 billion while TLP rose to P2,060.38 billion from P2,058.53 billion. On a year-on-year basis, this period’s ratio was 2.73 percentage points better than the base figure of 8.01 percent.

The industry’s NPL ratio, exclusive of interbank loans, followed the same trend improving by 0.39 percentage point to 6.58 percent from last month’s 6.97 percent as regular loans increased by 1.09 percent. This month’s ratio also eased by 3.41 percentage points from year ago’s 9.99 percent.
 
Meanwhile, restructured loans (RLs) contracted by 4.74 percent from last month’s level and by 24.04 percent from year ago to P75.73 billion. Consequently, the ratio of RLs to TLP dropped to 3.64 percent from last month’s 3.82 percent and year ago’s 5.20 percent.

There was continued progress in the disposal of foreclosed properties. Real and other properties acquired (ROPA) declined by 3.61 percent to P162.70 billion from P168.79 billion last month, pressing the ratio of ROPA to gross assets (GA) down to 3.62 percent from 3.82 percent. Annually, the stock of foreclosed properties was reduced by 17.33 percent while their proportion to the industry’s GAs shed 1.32 percentage points from the 4.94 percent ratio recorded at end-March 2006.

The non-performing assets (NPA) ratio got better to 5.83 percent from the previous month’s 6.19 percent. This was driven by the simultaneous 4.25 percent reduction in NPAs and the 1.78 percent expansion in GAs.  This month’s ratio was much better by 2.73 percentage points than year ago’s 8.56 percent ratio.

The NPL and NPA coverage ratios widened to 81.24 percent (vs. 80.09 percent last month) and 39.36 percent (vs. 39.20 percent), respectively. These developments were largely due to the downtrends in NPLs and NPAs, which outweighed the cut in loan loss reserves (LLRs) and NPA reserves to P88.31 billion and P102.51 billion, respectively. Year-on-year, this month’s NPL coverage ratio was stronger than the base figure of 78.61 percent whereas the NPA coverage ratio trimmed from 41.65 percent.

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