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U/KBs' NPL Ratio Improves Anew to 2.97 Percent in December


As of end-December 2009, the non-performing loans (NPL) ratio of universal and commercial banks (U/KBs) eased by 0.29 percentage point to 2.97 percent from last month’s 3.26 percent and by 0.55 percentage point from last year’s 3.52 percent ratio. This month’s NPL ratio is the lowest in 13 years. The industry posted a 2.80 percent ratio at end-December 1996.

The improvement from last month occurred as the 5.00 percent reduction in NPLs was accompanied by the 4.22 percent growth in total loan portfolio (TLP). NPLs fell to P80.91 billion from last month’s P85.17 billion while TLP grew to P2,724.87 billion from P2,614.59 billion.

Net of interbank loans (IBL), the NPL ratio also improved to 3.40 percent from last month’s 3.74 percent and last year’s 3.87 percent ratio. The month-on-month development transpired as the decline in NPLs came with the 4.63 percent expansion in regular loans to P2,380.49 billion.

Meanwhile, real and other properties acquired (ROPA) was reduced from last month by 0.49 percent to P135.41 billion which together with the drop in NPLs brought down non-performing assets (NPA) by 2.23 percent to P216.32 billion. As a result, the NPAs to Gross Assets (GA) ratio improved to 3.86 percent from the previous month’s 4.04 percent.  This month’s NPA ratio is also better than the 4.51 percent ratio posted last year. 

The restructured loans (RLs) to TLP ratio fell to 1.65 percent from last month’s 1.72 percent and last year’s 2.21 percent ratio. The month-on-month decline in the ratio took place as the 0.09 percent increase in gross RLs to P45.43 billion was outmatched by the larger expansion in loans.

The industry provided adequate provisioning against potential credit losses. The NPL coverage ratio strengthened to 112.34 percent from last month’s 109.77 percent. Likewise, the NPA coverage ratio widened to 54.88 percent from last month’s 54.73 percent.  Year-on-year, this month’s NPL and NPA coverage ratios also fared better than their reference ratios of 100.01 percent and 50.19 percent, respectively.

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