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Thrift Banks' NPL Ratio Eases to 6.72% in January


As of end-January 2008, the thrift banking industry’s non-performing loans (NPL) ratio stood at 6.72 percent, easing by 0.15 percentage point from last month’s 6.87 percent and by 1.31 percentage points from year ago’s 8.03 percent ratio. The month-on-month improvement was due to the minute 0.28 percent contraction in NPLs and the modest 1.82 percent growth in total loan portfolio (TLP). Moreover, the industry was able to sustain a single-digit NPL ratio for the past 34 months now.

Exclusive of interbank loans (IBL), the industry’s NPL ratio at 8.24 percent went up from last month’s 8.17 percent as core lending tapered by 1.11 percent to P244.93 billion. Yet, this month’s ratio is better than year ago’s 9.27 percent ratio.
Restructured loans dropped by 1.17 percent to P4.82 billion in January. Thus, the proportion of RLs to TLP went down to 1.60 percent from last month’s 1.64 percent.

The ratio of real and other properties acquired (ROPA) over gross assets (GA) slipped to 6.22 percent from last month’s 6.68 percent. This occurred as ROPA shrunk by 6.65 percent to P31.21 billion. In addition, this month’s ratio is an improvement by 1.32 percentage points from year ago’s 7.54 percent ratio.

The non-performing assets (NPA) ratio got better to 9.42 percent from last month’s 9.90 percent as NPAs declined by 4.58 percent to P47.08 billion. Year-on-year, this month’s ratio is 1.66 percentage points better than the reference ratio of 11.08 percent.

Meanwhile, the NPL coverage ratio slid to 46.85 percent from 47.25 percent last month and 51.96 percent a year ago. The month-on-month development transpired as loan loss reserves (LLRs) decreased by 1.13 percent to P9.45 billion.

The NPA coverage ratio was also pared to 24.83 percent (from 25.53 percent in December) due to the 7.19 percent shrinkage in NPA reserves to P11.69 billion. Similarly, this month’s ratio was comparatively leaner than year ago’s 26.61 percent ratio.

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