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Thrift Banks' NPL Ratio Eases Anew in March

08.15.2008

As of end-March 2008, the thrift banking industry’s non-performing loans (NPL) ratio stood at 6.67 percent, easing by 0.04 percentage point from last month’s 6.71 percent and by 0.62 percentage point from year ago’s 7.29 percent ratio. The improvement from last month was due to the 4.47 percent contraction in NPLs, partly softened by the 3.88 percent decline in total loan portfolio (TLP). All in all, the industry was able to sustain a single-digit NPL ratio for the past 36 months now.

Exclusive of interbank loans (IBL), the industry’s NPL ratio at 7.65 percent likewise improved from last month’s 8.52 percent as core lending expanded by 6.36 percent to P257.95 billion. In addition, this month’s ratio is better than year ago’s 8.66 percent ratio.
 
Restructured loans shrunk by 0.83 percent to P4.47 billion in March. Yet, the proportion of RLs to TLP went up to 1.50 percent from last month’s 1.45 percent due to the faster reduction of TLP.

The ratio of real and other properties acquired (ROPA) over gross assets (GA) slipped to 5.65 percent from last month’s 6.14 percent. This occurred as ROPA dropped by 9.57 percent to P28.19 billion. Also, this month’s ratio was better by 1.76 percentage points from year ago’s 7.41 percent ratio.

The non-performing assets (NPA) ratio went up to 9.64 percent from last month’s 9.39 percent as NPAs marginally increased by 0.93 percent to P47.92 billion. Year-on-year, this month’s ratio is 1.10 percentage points better than the reference ratio of 10.74 percent.

Meanwhile, the NPL coverage ratio broadened to 48.59 percent, or by 2.25 percentage points from 46.34 percent last month. This transpired as loan loss reserves (LLRs) increased slightly by 0.18 percent to P9.59 billion. However, this month’s ratio paled in comparison to the 50.46 percent ratio posted a year ago.

The NPA coverage ratio, on the other hand, widened to 25.94 percent (from 25.44 percent in February) due to the 2.89 percent enhancement in NPA reserves to P12.43 billion. Similarly, this month’s ratio was comparatively wider than year ago’s 25.74 percent ratio.

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