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Update on NPLs of Thrift Banks as of End-February 2004

05.13.2004

The thrift banking industry’s NPL (non-performing loans) ratio slightly increased to 12.35 percent from 12.32 percent last month. ear-on-year, this ratio is 0.11 percentage point higher than the 12.24 percent NPL ratio as of end-February 2003. This developed as NPLs and TLP (gross) simultaneously declined, i.e., by 2.0 percent and 2.1 percent, respectively. The decline in NPLs was due mainly to the lower NPLs reported by majority of the reporting banks (49.0 percent or 44 banks of the 90 reporting banks). The P0.67 billion combined reduction in the NPLs of these banks, coupled with the contained NPL levels of 13 other banks, more than made up for the P0.29 billion combined increase in NPLs of 33 banks.

Meanwhile, the industry’s NPL ratio, exclusive of interbank loans (IBL), slightly improved by 0.05 percentage point to 12.78 percent from last month’s 12.83 percent ratio. Thus, it is almost equal the year ago NPL ratio (net of IBL) of 12.77 percent. This developed as the 2.0 percent decline in NPLs was accompanied by a 1.6 percent contraction in TLP (net of IBL).

The ratio of Restructured Loans (RLs, gross) to TLP (gross) likewise somewhat improved to 2.54 percent (or by 0.07 percentage point) from 2.61 percent last month but remained higher by 0.21 percentage point from the 2.33 percent ratio a year ago. This was on account of the 4.7 percent contraction in RLs (gross), which was more than double the decline in TLP (gross) during the month.

The industry’s NPA (non-performing assets) ratio went up by 0.88 percentage point to 16.75 percent from 15.87 percent last month but remained lower by 0.71 percent than the 17.46 percent ratio a year ago. This was brought about mainly by the 6.5 percent hike in NPAs which, in turn, was driven by the 13.0 percent increase in real and other properties owned or acquired (ROPOA), excluding performing sales contract receivables.

NPL Coverage Ratio improved by 0.72 percentage point to 38.88 percent from 38.16 percent a month ago. This was, however, lower by 3.41 percentage points from the 42.29 percent ratio a year ago. In spite of the decline in NPLs, Loan Loss Reserves (LLRs) were maintained at P7.46 billion (as in the previous month). In contrast, NPA Coverage Ratio decreased by 1.20 percentage points to 17.91 percent from 19.11 percent last month and by 1.19 percent from last year’s ratio of 19.10 percent.

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