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Thrift Banks' NPL Ratio Improves Anew to 6.18 Percent in the 2nd Quarter of 2011

02.10.2012

The non-performing loans (NPL) ratio of the thrift banking industry as of end-June 2011 improved anew by 0.38 percentage point to 6.18 percent from previous quarter’s 6.56 percent and by 1.75 percentage points from year ago’s 7.93 percent.

The quarter-on-quarter improvement in the industry’s NPL ratio came about as NPLs contracted by 1.37 percent to P22.75 billion from P23.06 billion while total loan portfolio (TLP) simultaneously expanded by 4.56 percent to P367.87 billion from P351.81 billion.

Exclusive of interbank loans (IBL), NPL ratio also got better by 0.34 percentage point to 6.33 percent from 6.67 percent. This ratio was also lower by 1.86 percentage points from year ago’s 8.19 percent.

The industry resorted to restructuring and foreclosure proceedings to lessen the holdings of delinquent loans. The proportion of restructured loans (RLs) to TLP rose to 1.19 percent from last quarter’s 1.16 percent as RLs grew by 7.47 percent to P4.43 billion from P4.12 billion last quarter.

Similarly, real and other properties acquired (ROPA) rose by 2.11 percent to P21.10 billion from last quarter’s P20.67 billion resulting to a higher ratio of ROPA to gross assets at 3.60 percent from 3.51 percent last quarter. Nevertheless, this ratio was still lower than year ago’s 4.41 percent.

With the expansion in ROPA exceeding the decline in NPLs, the non-performing assets (NPA) increased by 0.28 percent to P43.85 billion from last quarter’s P43.73 billion. Simultaneously, the NPA ratio of the industry went up to 7.52 percent from 7.46 percent last quarter. Nonetheless, this quarter’s ratio was better than year ago’s 9.09 percent.

As loan loss reserves (LLRs) fell by 2.72 percent to P13.42 billion from previous quarter’s P13.80 billion, the NPL coverage ratio narrowed by 0.82 percentage point to 59.00 percent from 59.82 percent. However, the NPL cover for the quarter was still better by 5.97 percentage points from year ago’s 53.03 percent ratio.

In the same manner, the NPA coverage ratio fell to 37.74 percent from 38.56 percent last quarter though still better than year ago’s 31.91 percent. This transpired as NPA reserves contracted by 1.85 percent to P16.55 billion.

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