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NPL Ratio of Rural Banks at 9.96 percent


As of end-September 2010, the non-performing loans (NPL) ratio of the rural banking industry rose by 0.54 percentage point to 9.96 percent from last quarter's 9.42 percent. Nonetheless, this was better by 0.62 percentage point from year ago's 10.58 percent.

The rise in the NPL ratio was brought on by the growth in NPLs by 4.91 percent to P9.96 billion from P9.49 billion last quarter and the 0.79 percent drop in total loan portfolio (TLP) to P99.98 billion from P100.78 billion.

Based on the three major geographical regions, rural banks in the Mindanao area exhibited better loan quality at 5.60 percent compared with rural banks in Luzon and Visayas which registered NPL ratios of 11.08 percent and 12.48 percent, respectively.

The ratio of restructured loans (RLs), gross to TLP, gross declined to 1.26 percent from 1.61 percent last quarter as the 22.56 percent decrease in RLs to P1.27 billion outpaced the cut in TLP. However, this quarter's ratio was still higher than year ago's 0.76 percent ratio.   

Real and other properties acquired (ROPA), gross slightly rose by 0.47 percent to P7.98 billion from previous quarter's P7.94 billion. Consequently, the ratio of ROPA, gross to gross assets went up to 4.82 percent from 4.78 percent.

With higher level of delinquent loans and ROPA, the non-performing assets (NPA) increased accordingly by 2.89 percent to P17.94 billion. Accompanied by lower gross assets, the NPA ratio of the industry moved up to 10.89 percent from 10.54 percent last quarter. Nonetheless, this quarter's ratio was better than year ago's 11.62 percent ratio.

The NPL coverage ratio narrowed to 47.80 percent from 48.50 percent last quarter as the 3.40 percent build up in loan loss reserves to P4.76 billion was outmatched by the rise in NPLs.

On the other hand, NPA coverage ratio widened to 29.96 percent from 29.75 percent last quarter. This developed as NPA reserves grew by 3.63 percent to P5.37 billion.  Likewise, this quarter's NPA coverage ratio was better than year ago's 24.56 percent ratio.

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