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Thrift Banks' NPL Ratio Improves to 7.29% in March

05.25.2007

The thrift banking industry’s non-performing loans (NPL) ratio as of end-March 2007 eased to 7.29 percent from the previous month’s 7.68 percent, or a month-on-month difference of 0.39 percentage point. On a year-on-year basis, the current NPL ratio is also better by 1.68 percentage points from the reference ratio of 8.97 percent.

The 0.83 percent decline in NPLs, coupled with the 4.53 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 24 months.

Exclusive of interbank loans (IBL), the industry’s NPL ratio likewise improved to 8.66 percent from last month’s 9.02 percent. This transpired as core lending rose by 3.28 percent (or P7.46 billion) to P235.18 billion. This month’s ratio is also better than year ago’s 9.68 percent ratio.
 
Restructuring activities slowed down by 0.23 percent during the month of March. Thus, the proportion of RLs to TLP went down to 1.99 percent from last month’s 2.09 percent. Likewise, this month’s ratio is lower by 0.86 percentage point from year ago’s 2.85 percent ratio.

Meantime, the ratio of real and other properties acquired (ROPA) over gross assets (GA) was pared to 7.41 percent from last month’s 7.54 percent. This transpired as GA grew at a faster pace than ROPA. Similarly, this month’s ratio is an improvement by 1.39 percentage points from year ago’s 8.80 percent ratio.

The non-performing assets (NPA) ratio improved to 10.74 percent from last month’s 10.97 percent as NPAs shrunk by 0.18 percent to P51.75 billion. Year-on-year, this month’s ratio is 1.88 percentage points better than the base figure of 12.62 percent.

Meanwhile, the NPL coverage ratio propped to 50.46 percent (vs. 49.90 percent last month). This was driven by the 0.28 percent increment in loan loss reserves (LLRs) to P10.28 billion. Moreover, the NPL coverage ratio showed significant enhancement from the 47.89 percent ratio posted a year ago.

The NPA coverage ratio widened to 25.74 percent (vs. 25.65 percent in February) as NPA reserves rose by 0.18 percent to P13.32 billion. In the same way, this month’s ratio was comparatively stronger than year ago’s 24.11 percent ratio.

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