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Thrift Banks Post 7.80% NPL Ratio in May

07.30.2007

The thrift banking industry posted a non-performing loans (NPL) ratio of 7.80 percent as of end-May 2007. Though higher than the previous month’s 7.30 percent, this month’s NPL ratio was an improvement of 0.77 percentage point over the 8.57 percent ratio recorded a year ago. The month-on-month rise in ratio was driven by the 4.21 percent increase in NPLs, coupled with the 2.52 percent decline in total loan portfolio (TLP). Nonetheless, the industry was able to sustain a single-digit NPL ratio for the past 26 months now.

Exclusive of interbank loans (IBL), the industry’s NPL ratio at 8.87 percent was also higher than last month’s 8.49 percent. This transpired as core lending slid by 0.27 percent to P239.17 billion. Yet, this month’s ratio is better than year ago’s 9.34 percent ratio.
 
Restructured loans shrunk to P5.59 billion in May. Still, the proportion of RLs to TLP crawled up to 2.04 percent from last month’s 2.00 percent as TLP contracted faster. Meanwhile, this month’s ratio is lower by 0.76 percentage point from year ago’s 2.80 percent ratio.

The ratio of real and other properties acquired (ROPA) over gross assets (GA) likewise went up to 7.69 percent from last month’s 7.42 percent. This came about as ROPA grew while GA declined. Quite the opposite, this month’s ratio is an improvement by 0.81 percentage point from year ago’s 8.50 percent ratio.

The non-performing assets (NPA) ratio rose to 11.31 percent from last month’s 10.76 percent as NPAs climbed by 3.51 percent to P53.66 billion. Year-on-year, this month’s ratio is 0.88 percentage point better than the reference ratio of 12.19 percent.

Meanwhile, the NPL coverage ratio improved to 51.79 percent (vs. 50.25 percent last month). This was brought on by the 7.40 percent increase in loan loss reserves (LLRs) to P10.98 billion. Moreover, the NPL coverage ratio showed significant enhancement from the 49.63 percent ratio posted a year ago.

The NPA coverage ratio got better to 26.32 percent (vs. 25.72 percent in April) as NPA reserves were raised to P14.12 billion from last month. Likewise, this month’s ratio was comparatively wider than year ago’s 25.04 percent ratio.

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