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Thrift Banks' NPL Ratio Eases to 6.80% in October

01.24.2008

As of end-October 2007, the thrift banking industry’s non-performing loans (NPL) ratio stood at 6.80 percent, easing by 0.68 percentage point from last month’s 7.48 percent and by 1.96 percentage points from year ago’s 8.76 percent ratio. The month-on-month improvement was due to the 0.54 percent decline in NPLs, which was complemented by the 9.36 percent expansion in total loan portfolio (TLP). Moreover, the industry was able to sustain a single-digit NPL ratio for the past 31 months now.

Exclusive of interbank loans (IBL), the industry’s NPL ratio at 8.95 percent improved from last month’s 9.12 percent as core lending increased by 1.34 percent to P239.24 billion. Likewise, this month’s ratio is better than year ago’s 9.83 percent ratio.
 
Restructured loans slid to P5.37 billion at end-October from P5.43 billion at end-September. Thus, the proportion of RLs to TLP lowered to 1.70 percent from last month’s 1.87 percent.

The ratio of real and other properties acquired (ROPA) over gross assets (GA) went down to 6.90 percent from last month’s 7.11 percent. This occurred as GAs grew faster than ROPA’s 0.67 percent ascent to P35.34 billion. Also, this month’s ratio is an improvement by 1.49 percentage points from year ago’s 8.39 percent ratio.

The non-performing assets (NPA) ratio got better to 10.29 percent from last month’s 10.65 percent as GAs grew at a faster rate of 3.72 percent compared with NPAs’ increment of 0.22 percent to P52.51 billion. Year-on-year, this month’s ratio is 2.05 percentage points better than the reference ratio of 12.34 percent.

Meanwhile, the NPL coverage ratio slid to 49.54 percent from 49.75 percent last month and 49.88 percent a year ago. The month-on-month development transpired as loan loss reserves (LLRs) slipped by 0.96 percent to P10.61 billion.

The NPA coverage ratio was also pared to 26.40 percent (from 26.66 percent in September) due to the 0.78 percent shrinkage in NPA reserves to P13.86 billion. Similarly, this month’s ratio was comparatively leaner than year ago’s 26.47 percent ratio.

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