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Universal and Commercial Banks' NPL Ratio Improved

05.27.2004

The industry’s non-performing loans (NPL) ratio at end-March 2004 improved further by 0.34 percentage point to 13.90 percent from 14.24 percent last month. Year-on-year, this was also better by 1.60 percentage points than the 15.50 percent NPL ratio as of end-March 2003. This developed as the 1.0 percent contraction in NPLs was accompanied by the 1.4 percent rise in total loan portfolio (TLP). The decline in NPLs was on account of the P6.58 billion combined reduction in the NPLs reported by 19 banks which more than offset the P4.04 billion combined increase in the NPLs of 14 banks. The remaining 9 banks reported no change in their NPLs.

Likewise, net of interbank loans (IBL), the NPL ratio went down by 0.53 percentage point to 17.02 percent from 17.55 percent last month and by 0.46 percentage point from 17.48 a year ago. The improvement came about as the 1.0 percent drop in NPLs was accompanied by a 2.0 percent rise in TLP (net of IBL).

The non-performing assets (NPA) ratio improved to 12.56 percent or by 0.28 percentage point from 12.84 percent last month and by 0.87 percentage point from 13.43 percent a year ago. This was brought about mainly by the 0.2 percent decline in NPAs to P448.07 billion coupled with the rise in gross assets (GAs) by 2.1 percent to P3,567.48 billion.

The NPL coverage ratio strengthened further by 0.44 percentage point to 52.41 percent from last month’s 51.97 percent. This transpired as the 1.0 percent or P2.54 billion drop in NPLs surpassed the 0.2 percent or P0.25 billion decrease in LLRs to P129.89 billion from P130.14 billion last month.

Similarly, the NPA coverage ratio advanced by 0.08 percentage point to 32.24 percent from the previous month’s 32.16 percent. This occurred as the less than 0.1 percent or P0.07 billion rise in NPA reserves to P144.45 billion was complemented by the 0.2 percent decline in NPAs.

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