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U/KBs' NPL Ratio Eases to 3.88 Percent in August


As of end-August 2008, the non-performing loans (NPL) ratio of universal and commercial banks (U/KBs) eased further to 3.88 percent from the previous month’s 3.98 percent and year ago’s 5.28 percent ratios.  The industry sustained an improving trend for the past 6 months and kept the NPL ratio below 4 percent for the past 3 months.

The month-on-month improvement in the ratio occurred as the 1.07 percent decline in NPLs was complemented by the 1.45 percent expansion in total loan portfolio (TLP). NPLs went down to P91.53 billion from last month’s P92.52 billion while TLP expanded to P2,360.56 billion from P2,326.82 billion.

Net of interbank loans (IBL), the NPL ratio also eased to 4.46 percent from last month’s 4.56 percent and year ago’s 6.33 percent ratios. The month-on-month development transpired as the drop in NPLs came with the 1.27 percent rise in regular loans to P2,054.04 billion from P2,028.30 billion last month.

The real and other properties acquired (ROPA) was reduced by 1.37 percent to P145.25 billion which in turn further lowered the level of non-performing assets (NPA) to P236.78 billion (down by 1.25 percent from last month). As a result, the NPA to Gross Assets (GA) ratio improved to 4.94 percent from the previous month’s 5.15 percent ratio.  

The restructured loans (RLs) to TLP ratio went up to 2.50 percent from the previous month’s 2.48 percent, driven by the 1.94 percent growth in gross RLs to P59.30 billion. This month’s ratio, however, is lower than year ago’s ratio of 3.58 percent.

The industry’s loan exposure remained adequately covered. The NPL coverage ratio continued to strengthen to 98.69 percent from last month’s 97.86 percent and year ago’s 86.12 percent ratios. Similarly, the NPA coverage ratio (NPA reserves to NPAs) widened to 49.02 percent from last month’s 48.40 and year ago’s 40.98 percent ratios.

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