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Universal and Commercial Banks' NPL Ratio Improves

06.18.2004

The industry’s non-performing loans (NPL) ratio at end-April 2004 improved further by 0.32 percentage point to 13.58 percent from 13.90 percent last month. This was also better by 1.94 percentage points than the 15.52 percent NPL ratio a year ago. This developed as the 2.0 percent contraction in NPLs was accompanied by the 0.4 percent rise in total loan portfolio (TLP). The decline in NPLs was on account of the P6.14 billion combined reduction in the NPLs reported by 18 banks which more than offset the P1.31 billion combined increase in the NPLs of 16 banks. The remaining 8 banks reported no change in their NPLs.

Likewise, net of interbank loans (IBL), the NPL ratio went down by 0.45 percentage point to 16.57 percent from 17.02 percent last month and by 0.87 percentage point from 17.44 a year ago. The improvement came about as the 2.0 percent drop in NPLs was accompanied by a 0.7 percent rise in TLP (net of IBL).

The ratio of real and other properties owned or acquired (ROPOA), gross to gross assets (GAs) remained at 5.75 percent as in the last month. This was attributed to the parallel month-on-month growth (0.6 percent) of ROPOA and GAs to P207.46 billion and P3,609.39 billion respectively. Exclusive of performing sales contract receivables, ROPOA growth was a bit higher, i.e., by 0.7 percent or P1.46 billion to P201.68 billion from P200.22 billion.

Restructured loans (RLs) to TLP ratio fell slightly by 0.02 percentage point to 7.43 percent from 7.45 percent last month. This developed as the 0.1 percent or P0.10 billion rise in RLs to P134.41 billion from P134.31 billion last month was surpassed by the 0.4 percent expansion in TLP. On the other hand, past due RLs to RLs ratio improved by 0.35 percentage point to 42.13 percent from 42.48 percent. This transpired as past due RLs declined by 0.8 percent or P0.44 billion to P56.62 billion from P57.06 billion last month.

The non-performing assets (NPA) ratio improved to 12.39 percent or by 0.17 percentage point from 12.56 percent last month and by 1.33 percentage points from 13.72 percent a year ago. This was brought about mainly by the 0.8 percent decline in NPAs to P444.63 billion coupled with the rise in GAs by 0.6 percent to P3,588.83 billion.

The NPL coverage ratio strengthened further by 0.77 percentage point to 53.16 percent from last month’s 52.39 percent. This developed as the 0.5 percent decrease in loan loss reserves was surpassed by the 2.0 percent drop in NPLs. Similarly, the NPA coverage ratio (NPA reserves to NPAs) improved by 0.31 percentage point to 32.54 percent from the previous month’s 32.23 percent. This came about as the 0.2 percent increment in the NPA reserves was accompanied by the 0.8 percent drop in NPAs.

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