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U/KBs' NPL Ratio Eases Further to 2.88 Percent in December

02.25.2011

As of end-December 2010, the non-performing loans (NPL) ratio of universal and commercial banks (U/KBs) eased by 0.19 percentage point to 2.88 percent from last month’s 3.07 percent and by 0.09 percentage point from last year’s 2.97 percent ratio. This is the twenty-seventh consecutive month that the NPL ratio has been below four percent. Moreover, this is the lowest recorded NPL ratio for the U/KBs since the onset of the 1997 Asian Financial Crisis.

The month-on-month development took place as the 3.04 percent drop in NPLs was complemented by the 3.34 percent expansion in total loan portfolio (TLP). NPLs fell to P80.80 billion from last month’s P83.33 billion while TLP grew to P2,802.29 billion from P2,711.78 billion.
 
Net of interbank loans, the NPL ratio also improved to 3.13 percent from last month’s 3.34 and last year’s 3.40 percent ratio. The easing of the ratio from last month came about as the fall in NPLs was accompanied by the 3.49 percent growth in regular loans to P2,584.46 billion.

The restructured loans (RLs) to TLP ratio went down to 1.56 percent from last month’s 1.58 percent and last year’s 1.65 percent ratio. The ratio fell from last month as the 1.85 percent rise in gross RLs to P44.07 billion was outweighed by the larger growth in loans.

Meantime, the real and other properties acquired (ROPA) to gross assets (GA) ratio got better to 1.99 percent from last month’s 2.08 percent and last year’s 2.41 percent ratio. The month-on-month movement occurred as the 1.95 percent reduction in ROPA to P124.71 billion was accompanied by the increase in GAs.

The non-performing assets (NPA) to GA ratio improved to 3.29 percent from last month’s 3.46 percent and last year’s 3.86 percent ratio. The easing of the ratio from last month took place as the 2.38 percent decline in NPAs came with the growth in GAs. The NPA level stood at P205.51 billion, down from last month’s P210.52 billion and last year’s P216.32 billion.

The industry provided adequate provisioning against potential credit losses. The NPL coverage ratio strengthened to 118.35 percent from last month’s 116.53. Likewise, the NPA coverage ratio widened to 60.04 percent from last month’s 59.68 percent. Year-on-year, this month’s NPL and NPA coverage ratios also fared better than their reference ratios of 112.34 percent and 54.88 percent, respectively.

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