As of end-September 2011, the non-performing loans (NPL) ratio of the rural banking industry eased to 10.25 percent, lower by 0.17 percentage point from last quarter’s 10.42 percent but higher by 0.62 percentage point from year ago’s 9.63 percent ratio.
The quarter-on-quarter improvement in the industry’s NPL ratio came as a result of the combined effect of the reduction in NPLs by 0.27 percent to P11.20 billion from P11.23 billion and the rise in total loan portfolio (TLP) by 1.33 percent to P109.23 billion from P107.81 billion.
Based on the three major geographical regions, rural banks in the Mindanao area exhibited better NPL ratio at 6.46 percent as against rural banks in Luzon and Visayas which registered NPL ratios of 11.47 percent and 10.43 percent, respectively.
The ratio of restructured loans (RLs), gross to TLP, gross tapered to 1.50 percent from 2.01 percent last quarter stemming from the 24.47 percent decline in RLs to P1.65 billion from P2.19 billion coupled with the growth in TLP.
Meantime, real and other properties acquired (ROPA), gross rose by 1.75 percent to P8.56 billion from previous quarter’s P8.41 billion. Consequently, the ratio of ROPA, gross to gross assets increased to 4.85 percent from 4.79 percent.
As a result of higher increment in ROPA surpassing the decrement in NPLs, the non-performing assets (NPA) edged up by 0.59 percent to P19.76 billion from last quarter’s P19.65 billion. With the slower growth in gross assets, the NPA ratio of the industry crawled up to 11.26 percent from 11.25 percent last quarter.
The NPL coverage ratio strengthened to 49.68 percent from 48.25 percent last quarter as the 2.69 percent build-up in loan loss reserves to P5.57 billion from last quarter’s P5.42 billion was complemented by the fall in NPLs.
Likewise, NPA coverage ratio widened to 31.72 percent from last quarter’s 31.04 percent. The ratio improved from last quarter due to the 2.82 percent increase in NPA reserves to P6.27 billion from P6.10 billion outpacing the rise in NPAs.