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NPL Ratio of Rural Banks Eases to 9.42 Percent


As of end-June 2010, the NPL ratio of the rural banking industry eased to 9.42 percent from last quarter’s 9.43 percent and from year ago’s 10.75 percent.

The slight improvement in the NPL ratio from last quarter came about as total loan portfolio (TLP) expanded by 0.88 percent to P100.22 billion from P99.35 billion outpacing the 0.81 percent growth in NPLs to P9.44 billion from P9.36 billion.

Based on the three major geographical regions, rural banks in the Mindanao area exhibited better loan quality at 5.62 percent as against rural banks in Luzon and Visayas which registered NPL ratios of 10.22 percent and 12.85 percent, respectively.

The ratio of restructured loans (RLs), gross to TLP, gross remained unchanged from last quarter’s 1.26 percent as the 1.78 percent growth in RLs to P1.28 Billion was compensated by the growth in TLP.

Real and other properties acquired (ROPA), gross fell by 0.47 percent to P7.96 billion from previous quarter’s P7.99 billion.  This was compensated by the growth in gross assets resulting to an easing of the ratio of ROPA, gross to gross assets to 4.80 percent from 4.95 percent.

With higher level of delinquent loans surpassing the decline in ROPA, the non-performing assets (NPA) consequently increased from last quarter by 0.22 percent to P17.40 billion. Nonetheless, the NPA ratio of the industry improved to 10.55 percent from 10.78 percent last quarter as gross assets simultaneously expanded faster at 2.35 percent.

The NPL coverage ratio widened to 48.56 percent from 46.78 percent last quarter. This resulted from the 4.65 percent growth in loan loss reserves to P4.58 billion from P4.38 billion.

Likewise, the NPA coverage ratio got better by 1.42 percentage points to 29.70 percent from 28.28 percent last quarter and by 5.27 percentage points from year ago’s 24.43 percent ratio. The quarter-on-quarter improvement came with the 5.23 percent build up in NPA reserves to P5.17 billion.

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