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Rural Banks Posted NPL Ratio of 10.13 Percent


As of end-September 2008, the rural banking system posted a non-performing loans (NPL) ratio of 10.13 percent, up by 0.19 percentage points from previous quarter’s 9.94 percent. Likewise, this ratio was also 0.27 percentage point higher than year ago’s 9.86 percent ratio.

The rise in the delinquency ratio transpired despite the 0.50 percent decline in NPLs to P9.91 bililon as total loan portfolio (TLP) contracted faster by 2.39 percent to P97.82 billion.

Based on the three major geographical regions, rural banks in the Mindanao area exhibited better loan quality at 7.18 percent as against rural banks in Luzon and Visayas which registered NPL ratios of 11.32 percent and 9.15 percent, respectively.

The ratio of restructured loans (RLs), gross to TLP dropped to 0.59 percent from 0.79 percent last quarter as RLs, gross fell by 27.29 percent to P0.58 billion. Likewise, the ratio was lower than year ago’s 1.09 percent ratio.

The industry resorted to foreclosure proceedings to lower  delinquency ratio as real and other properties acquired (ROPA), gross increased by  17.26   percent   to   P15.66   billion  from  previous  quarter’s  P13.35  billion. Consequently, the ratio of ROPA, gross to gross assets rose to 9.69 percent from 8.21 percent last quarter.

With higher level of delinquent loans and ROPA, the non-performing assets (NPA) expanded by 11.60 percent to P21.83 billion. As a result, the NPA ratio of the industry moved up to 13.56 percent from 12.06 percent last quarter. This ratio was also higher than the 11.32 percent ratio posted a year ago.

Quarter-on-quarter, loan loss reserves rose by 1.62 percent to P3.73 billion. Hence, the NPL coverage ratio widened to 37.61 percent from 36.83 percent last quarter.

The NPA coverage ratio declined by 1.82 percentage points to 18.79 percent from 20.61 percent last quarter. This developed as NPAs grew faster than the 1.76 percent growth in NPA reserves.  Likewise, this month’s NPA coverage ratio was lower than the 20.12 percent ratio recorded a year ago.

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