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NPL Ratio of Rural and Cooperative Banks Down to 10.10 Percent


As of end-September 2007, the rural and cooperative banks (R/CBs) posted a non-performing loans (NPL) ratio of 10.10 percent. This is the fifth consecutive quarter of improvement in ratio from 10.57 percent at end-June 2007, 10.92 percent at end-March 2007, 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 came about as NPLs declined by 2.09 percent to P9.45 billion while total loan portfolio (TLP) simultaneously expanded by 2.48 percent to P93.55 billion.

Based on the three major geographical regions, R/CBs in the Mindanao area exhibited better loan quality at 8.60 percent as compared to R/CBs in Luzon and Visayas area which registered NPL ratios of 10.36 percent and 11.89 percent, respectively.

The ratio of restructured loans (RLs), gross to TLP, gross slightly dropped to 1.18 percent from 1.21 percent despite the 0.05 percent growth in RLs, gross. This was driven by the quicker expansion of TLP.

The industry made efforts to lower delinquent loans through foreclosure. Real and other properties acquired (ROPA), gross grew by 4.61 percent to P11.53 billion from P11.02 billion last quarter. Consequently, the ratio of ROPA, gross to gross assets increased by 0.23 percentage point to 7.46  percent from 7.23 percent.

The ratio of non-performing assets (NPAs) to gross assets eased by 0.41 percentage point to 11.41 percent from 11.82 percent last quarter. The 2.19 percent reduction in NPAs to P17.55 billion from P17.94 billion was complemented by the 1.35 percent rise in gross assets.

Notwithstanding lower levels of NPLs, the NPL coverage ratio declined to 34.42 percent from 34.82 percent last quarter. This developed as loan loss reserves decreased by 3.22 percent to P3.25 billion, outpacing the 2.09 percent decline in NPLs.

Likewise, the NPA coverage ratio slid to 20.45 percent from 20.62 percent last quarter as NPA reserves dropped by 2.97 percent settling to P3.59 billion.

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