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2nd Quarter 2011 NPL Ratio of Rural Banks at 10.42 Pecent

02.10.2012

As of end-June 2011, the non-performing loans (NPL) ratio of the rural banking industry rose by 0.03 percentage point to 10.42 percent from last quarter’s 10.39 percent and by 1.0 percentage point from year ago’s 9.42 percent ratio.

The rise in the NPL ratio was brought on by the growth in NPLs by 2.91 percent to P11.23 billion from P10.91 billion last quarter outpacing the 2.64 percent expansion in TLP to P107.81 billion from P105.03 billion

Based on the three major geographical regions, rural banks in the Mindanao area exhibited better loan quality at 5.52 percent compared with rural banks in Luzon and Visayas which registered NPL ratios of 11.98 percent and 10.22 percent, respectively.

The ratio of restructured loans (RLs), gross to TLP, gross rose to 2.01 percent from 1.59 percent last quarter on account of the 29.93 percent rise in RLs to P2.19 billion. Likewise, this quarter’s ratio was higher than year ago’s 1.26 percent.

Real and other properties acquired (ROPA), gross increased by 2.77 percent to P8.41 billion from previous quarter’s P8.19 billion. Consequently, the ratio of ROPA, gross to gross assets went up to 4.79 percent from 4.74 percent.

With higher levels of delinquent loans and ROPA, the non-performing assets (NPA) grew accordingly from last quarter by 2.85 percent to P19.65 billion. This pushed the NPA ratio up to 11.25 percent from 11.12 percent last quarter. Moreover, this quarter’s ratio was higher than year ago’s 10.55 percent ratio.

The additional provisioning provided by the industry to cover for the higher level of NPLs fell short as the NPL coverage ratio narrowed to 48.25 percent from previous quarter’s 48.64 percent. The growth in delinquent loans outpaced the 2.08 percent additional loan loss reserves to P5.42 billion from last quarter’s P5.31 billion.

Similarly, the NPA coverage ratio went down by 0.22 percentage point to 31.04 percent from 31.26 percent last quarter. This developed as the 2.85 percent expansion in NPAs outpaced the 2.12 percent growth in NPA reserves to P6.10 billion.  Nonetheless, this quarter’s NPA coverage ratio was better than year ago’s 29.70 percent ratio.

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