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Rural Banks’ NPL Ratio Improves to 10.58 Percent


As of end-September 2009, the rural banking system posted a non-performing loans (NPL) ratio of 10.58 percent, easing by 0.17 percentage point from previous quarter’s 10.75 percent. However, this ratio was 0.45 percentage point higher than year ago’s 10.13 percent ratio. 

The quarter-on-quarter improvement came about as NPLs declined by 0.58 percent to P10.21 billion from P10.27 billion last quarter while total loan portfolio (TLP) simultaneously expanded by 1.01 percent to P96.45 billion from P95.49 billion.

Based on the three major geographical regions, rural banks in the Mindanao area exhibited better loan quality at 8.02 percent as against rural banks in Luzon and Visayas which registered NPL ratios of 10.84 percent and 15.38 percent, respectively.

The ratio of restructured loans (RLs), gross to TLP, gross rose to 0.76 percent from 0.65 percent last quarter as the RLs grew by 17.00 percent to P0.73 billion from P0.63 billion last quarter.

Meantime, real and other properties acquired (ROPA), gross went up by 0.63 percent to P7.67 billion from previous quarter’s P7.62 billion. However, with the faster expansion in gross assets, the ratio of ROPA, gross to gross assets fell to 4.96 percent from 5.03 percent last quarter.

The non-performing assets (NPA) remained unchanged at P17.88 billion as the decline in NPLs was offset by the increase in ROPA. With gross assets expanding by 1.99 percent, the NPA ratio of the industry improved to 11.62 percent from 11.86 percent last quarter.   Year on year, this quarter’s ratio was also better than the reference ratio of 13.56 percent.

The NPL coverage ratio widened to 38.74 percent from 38.46 percent last quarter as  loan loss reserves rose by 0.16 percent to P3.96 billion and was complemented by the decline in NPLs.

Likewise, the NPA coverage ratio widened by 0.13 percentage point to 24.56 percent from 24.43 percent last quarter. This developed as NPA reserves grew by 0.48 percent to P4.39  billion.  Likewise, this quarter’s NPA coverage ratio was better than year ago’s 18.79 percent ratio.

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