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U/KBs' NPL Ratio at 2.23 Percent

02.27.2012

As of end-December 2011, the non-performing loans (NPL) ratio of universal and commercial banks (U/KBs) further improved to 2.23 percent.  This ratio was lower by 0.16 percentage point from the previous month’s 2.39 percent and by 0.63 percentage point from last year’s 2.86 percent ratio.  This is the lowest recorded NPL ratio for U/KBs since the onset of the 1997 Asian Financial Crisis.

The month-on-month development in the NPL ratio came about as the 4.56 percent drop in NPLs to P71.94 billion from P75.37 billion was accompanied by the 2.05 percent rise in total loan portfolio (TLP) to P3,221.77 billion from P3,157.08 billion.

Net of interbank loans (IBL), the NPL ratio likewise went down by 0.18 percentage point to 2.35 percent from last month’s 2.53 percent and by 0.75 percentage point from last year’s 3.10 percent ratio. Month-on-month, the ratio trimmed as a result of the combined effect of the contraction in NPLs and the 2.89 percent expansion in regular loans to P3,067.42 billion from P2,981.31 billion.

Meantime, the restructured loans (RLs) to TLP ratio stood at 1.24 percent at end-December 2011, better than last month’s 1.28 percent and last year’s 1.56 percent ratio. The month-on-month cut in the ratio was driven by the 1.12 percent fall in gross RLs which was complemented by the rise in TLP.

Real and other properties acquired (ROPA), gross to gross assets (GAs) tapered to 1.67 percent from last month’s 1.75 percent and last year’s 1.99 percent ratio. The reduction in the ratio from last month stemmed from the 3.04 percent decrease in ROPA, as well as the increase in GAs (per Circular No. 202) to P6,692.88 billion.

The non-performing assets (NPA) to GAs ratio eased to 2.76 percent from last month’s 2.91 percent and from last year’s 3.28 percent ratio. The ratio lessened from last month due to the simultaneous 3.64 percent decline in NPAs and the 1.85 percent increment in GAs.

The industry’s provisioning against potential credit losses remained adequate. The NPL coverage ratio (LLRs to NPLs) strengthened to 126.36 percent from last month’s 122.20 percent and from last year’s 118.48 percent ratio. Likewise, the NPA coverage ratio (NPA reserves to NPA) widened to 64.44 percent from 62.86 percent last month and from last year’s 59.92 percent ratio.

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