The non-performing loans (NPL) ratio of the thrift banking (TB) industry as of end-December 2012 rose by 0.37 percentage point to 5.34 percent from the previous semester’s 4.97 percent. The expansion in the NPL real estate, wholesale and retail trade loans of most thrift banks triggered the build-up in the Industry’s NPLs. Nevertheless, this semester’s ratio was still better by 0.38 percentage point from last year’s 5.72 percent.
On the other hand, the total loan portfolio (TLP) level has been following a general upward trend since end-December 2011. As of 31 December 2012, the thrift banks’ TLP of P446.56 billion accounted for only 10.65 percent of the total loans of the Philippine Banking System.
The industry’s NPL coverage ratio (loan loss reserves to NPLs) went down to 64.59 percent in December 2012 from 71.55 percent last semester but increased from 58.97 percent last year. This also indicates that the industry’s credit risk remains well-contained amid the current low-interest market environment and growing domestic economy.
The real estate, loans to individuals for consumption purposes and financial intermediation sectors were the biggest recipients of TB loans with 70.47 percent combined TLP share.
In line with its role of promoting financial stability, BSP continues to monitor the quality and soundness of banks’ loan portfolio. Keeping credit standards at high levels, which is essential to mitigating risks in the industry, is a key policy objective for BSP.