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Thrift Banks’ NPL Ratio Eases To 6.99% In July

09.20.2007

As of end-July 2007, the thrift banking industry’s non-performing loans (NPL) ratio stood at 6.99 percent, easing by 0.90 percentage point from last month’s 7.89 percent and by 1.39 percentage points from year ago’s 8.38 percent ratio. The month-on-month improvement was due to the simultaneous decline in NPLs by 0.72 percent and the 12.10 percent expansion in total loan portfolio (TLP). All in all, the industry was able to sustain a single-digit NPL ratio for the past 28 months now.

Exclusive of IBL, the industry’s NPL ratio likewise got better to 8.71 percent from last month’s 8.93 percent. This transpired as core lending rose slightly to P243.66 billion from P239.36 billion last month. Also, this month’s ratio is better than year ago’s 9.32 percent ratio.
  
Restructured loans stuck to the P5.47 billion level between June and July. Yet, the proportion of RLs to TLP slid further to 1.79 percent from last month’s 2.01 percent and year ago’s 2.61 percent ratio as TLP expanded.

The ratio of real and other properties acquired (ROPA) over gross assets (GA) softened to 6.97 percent from last month’s 7.32 percent. This came about as ROPA shrunk by 0.19 percent to P35.14 billion. Moreover, this month’s ratio is an improvement by 1.76 percentage points from year ago’s 8.73 percent ratio.

The non-performing assets (NPA) ratio got better to 10.39 percent from last month’s 10.92 percent as NPAs slid by 0.31 percent to P52.17 billion. Year-on-year, this month’s ratio is 2.01 percentage points better than the reference ratio of 12.40 percent.

Meanwhile, the NPL coverage ratio widened to 50.76 percent from 50.48 percent last month but still leaner compared with year ago’s 52.89 percent ratio. The month-on-month development was brought on by the faster contraction in NPLs compared to the 0.16 percent marginal decline in loan loss reserves (LLRs) to P10.77 billion.

The NPA coverage ratio advanced to 26.92 percent (vs. 26.84 percent in June) as NPA reserves barely changed at P14.04 billion while NPAs declined. Likewise, this month’s ratio was comparatively wider than year ago’s 25.49 percent ratio.

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