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NPL Ratio of R/CBs Improves in First Quarter of 2007


As of end-March 2007, the rural and cooperative banks (R/CBs) posted a non-performing loans (NPL) ratio of 10.96 percent. This is the third consecutive quarter of improvement in ratio from 11.07 percent at end-December 2006, 11.63 percent at end-September 2006 and 12.07 ratio at end-June 2006.

The quarter-on-quarter improvement was driven by the sustained growth of the industry’s loan portfolio. Total loan portfolio (TLP) expanded by 1.90 percent, outpacing the 0.88 percent increase in NPLs.

Based on the three major geographical regions, R/CBs located in Mindanao continued to have the lowest NPL ratio at 9.03 percent (up from 8.98 percent last quarter) compared to R/CBs in Luzon and Visayas, which posted relatively higher ratios of 11.30 percent (down from 11.40 percent) and 11.97 percent (down from 12.25 percent), respectively.

The ratio of restructured loans (RLs), gross to TLP, gross rose to 1.27 percent from last quarter’s 1.04 percent brought on by the 24.25 percent increase  in  RLs,  gross  to  P1.06  billion  from   P0.86   billion   last  quarter.

Likewise, this period’s ratio was higher by 0.20 percentage point than year ago’s 1.07 percent ratio.
Real and other properties acquired (ROPA), gross registered a downtrend during the quarter, settling to P10.89 billion from last quarter’s P11.12 billion. Consequently, the ratio of ROPA, gross to gross assets declined to 7.71 percent from last quarter’s 8.07 percent.

The ratio of non-performing assets (NPAs) to gross assets eased by 0.39 percentage point to 12.02 percent from 12.41 percent last quarter. The 0.60 percent decline in NPAs to P16.93 billion was matched by the 2.57 percent rise in gross assets.

The NPL coverage ratio favorably climbed to 35.44 percent from 35.23 percent last quarter. This developed as loan loss reserves (LLRs) grew by 1.50 percent to P3.23 billion, outpacing the growth in NPLs.
Similarly, the NPA coverage ratio (LLRs + ROPA reserves to NPAs) widened to 20.94 percent from 20.57 percent last quarter as NPA reserves expanded by 1.17 percent simultaneous with the decline in NPAs.

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