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NPL Ratio of Cooperative Banks Improves to 9.62 Percent

01.28.2009

As of end-September 2008, the NPL ratio of the cooperative banking industry improved by 0.50 percentage point to 9.62 percent from last quarter’s 10.12 percent and by 3.43 percentage points from year ago’s 13.05 percent ratio.

The quarter-on-quarter improvement came about as the 1.29 percent increase in NPLs to P0.85 billion was outpaced by the 6.55 percent rise in total loan portfolio (TLP) to P8.80 billion.

The industry remained a steadfast player in countryside financing, with a major portion of its P0.54 billion loan expansion for the third quarter of 2008 still flowing to the agricultural sector.

In terms of the three main geographical regions, cooperative banks in the Mindanao area posted the highest NPL ratio at 17.22 percent while cooperative banks in the Luzon and Visayas area posted NPL ratios of 7.67 percent and 10.12 percent, respectively.

The ratio of restructured loans (RLs), gross to TLP declined to 1.95 percent from last quarter’s 2.01 percent and year ago’s 2.22 percent ratio. The quarter-on-quarter movement came about as the 3.15 percent growth in RLs, gross to P0.17 billion was surpassed by the expansion in TLP.

The industry further resorted to foreclosure proceedings as real and other properties acquired (ROPA), gross increased by 2.98 percent to P0.46 billion. However, this was outweighed by the faster growth in gross assets. Consequently, the ratio of ROPA, gross to gross assets declined to 3.61 percent from 3.72 percent.

The ratio of non-performing assets (NPAs) to gross assets improved to 10.12 percent from last quarter’s 10.47 percent. This development transpired as the 2.68 percent increase in NPAs to P1.28 billion was outweighed by the 6.18 percent rise in gross assets to P12.62 billion.

The NPL coverage ratio widened to 50.94 percent from 48.54 percent last quarter. This transpired as the growth in loan loss reserves by 6.29 percent to P0.43 billion outpaced the increase in NPLs.

Likewise, the NPA coverage ratio broadened to 34.59 percent from last quarter’s 33.48 percent as NPA reserves climbed by 6.09 percent to P0.44 billion. This quarter’s NPA coverage ratio was also much better than the 24.67 percent ratio recorded a year ago.

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