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Thrift Banks' NPL Ratio Eases Anew in February

04.28.2008

As of end-February 2008, the thrift banking industry’s non-performing loans (NPL) ratio stood at 6.71 percent, easing by 0.01 percentage point from last month’s 6.72 percent and by 0.97 percentage point from year ago’s 7.68 percent ratio. The slight improvement from last month was due to the faster 2.60 percent contraction in growth in total loan portfolio (TLP), offsetting the 2.40 percent increase in NPLs. Moreover, the industry was able to sustain a single-digit NPL ratio for the past 35 months now.

Exclusive of interbank loans (IBL), the industry’s NPL ratio at 8.52 percent went up from last month’s 8.24 percent as core lending tapered by 0.98 percent to P242.52 billion. Yet, this month’s ratio is better than year ago’s 9.02 percent ratio.
 
Restructured loans dropped by 6.61 percent to P4.50 billion in February. Thus, the proportion of RLs to TLP went down to 1.45 percent from last month’s 1.60 percent.

The ratio of real and other properties acquired (ROPA) over gross assets (GA) slipped to 6.14 percent from last month’s 6.22 percent. This occurred as ROPA shrunk by 0.15 percent to P31.17 billion. In addition, this month’s ratio is an improvement by 1.40 percentage points from year ago’s 7.54 percent ratio.

The non-performing assets (NPA) ratio got better to 9.39 percent from last month’s 9.42 percent as the 1.23 percent growth in gross assets (GAs) stifled the 0.85 percent increase in NPAs to P47.48 billion. Year-on-year, this month’s ratio is 1.58 percentage points better than the reference ratio of 10.97 percent.

Meanwhile, the NPL coverage ratio slid to 46.33 percent from 46.85 percent last month and 49.90 percent a year ago. The month-on-month development transpired as loan loss reserves (LLRs) increased at a slower rate of 1.25 percent to P9.57 billion as compared with that of NPLs.

The NPA coverage ratio, on the other hand, widened to 25.44 percent (from 24.83 percent in January) due to the 3.32 percent rise in NPA reserves to P12.08 billion. Quite the reverse, this month’s ratio was comparatively leaner than year ago’s 25.65 percent ratio.

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