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Thrift Banks' NPL Ratio Eases to 7.27% in December

03.26.2010

As of end-December 2009, the thrift banking industry’s NPL ratio stood at 7.27 percent, easing by 1.17 percentage points from last quarter’s 8.44 percent but up by 0.11 percentage point from last year’s 7.16 percent ratio. The reduction from last quarter was due to the simultaneous 6.55 percent cut in NPLs and the 8.42 percent growth in total loan portfolio (TLP). Furthermore, the industry was able to maintain a single digit NPL ratio for the past 19 quarters and was able to pull the ratio below the pre-Asian crisis ratio of 7.74 percent (as of end-June 1997).

Exclusive of interbank loans (IBL), the NPL ratio also eased to 7.40 percent from 8.54 percent last quarter as the 7.86 percent growth in core lending to P316.08 billion complemented the decline in NPLs. Likewise, this quarter’s ratio was better than last year’s 7.61 percent as the increased activity in core lending outpaced the NPL buildup, i.e., 13.28 percent vs. 10.26 percent.

The ratio of restructured loans (RLs) to TLP posted a lower figure of 1.36 percent compared with last quarter’s 1.41 percent. The quarter-on-quarter expansion of RLs by 4.36 percent to P4.41 billion was surpassed by the faster increment in TLP. 

The real and other properties acquired (ROPA) to gross assets (GA) ratio barely moved to 4.42 percent from 4.41 percent last quarter. This developed as the 4.78 percent buildup of ROPA almost matched the expansion of GAs. On the other hand, this quarter’s ratio was lower by 0.91 percentage point than last year’s 5.33 percent ratio.

The non-performing assets (NPA) ratio improved to 8.69 percent or by 0.49 percentage point from last quarter’s 9.18 percent. This was due to the simultaneous 1.08 percent drop in NPAs and 4.48 percent rise in GAs. Furthermore, this quarter’s ratio was better by 0.94 percentage point from last year’s 9.63 percent ratio.

The NPL coverage ratio settled at 51.70 percent, wider by 1.90 percentage points from 49.80 percent last quarter. This stemmed from the relatively faster drop in NPLs than the 2.97 percent reduction in LLRs to P12.10 billion. Likewise, this quarter’s NPL coverage ratio was higher than last year’s 51.18 percent ratio.

 Meanwhile, the NPA coverage ratio contracted to 29.86 percent from 30.00 percent last quarter yet better than last year’s 27.96 percent ratio. The quarter-on-quarter movement was due to the slower reduction in NPAs compared with the 1.55 percent cut in NPA reserves.

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