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NPLs of Rural and Cooperative Banks Rise

09.12.2014

The combined gross non-performing loans (NPLs) of rural (RBs) and cooperative banks stood at Php 18.11 billion at end of the first quarter this year.

The latest figure marks the third consecutive quarter that NPLs have increased. However, taken as a percentage of their total loan portfolio (TLP), NPLs have largely been stable on a quarter-on-quarter basis. The banks’ gross NPL ratio stood at 13.14 percent in March, practically unchanged from the 13.13 percent recorded a quarter earlier.

As a prudential measure for mitigating credit risks, RBs and cooperative banks set aside loan loss reserves equivalent to 58.58 percent of their gross NPLs in March. The figure is slightly lower than the 59.68 percent recorded at end-2013.

For an industry perspective, the loans extended by RBs and cooperative banks represented 2.75 percent of the banking system’s TLP of Php 5.00 trillion in March. Their NPLs comprised 0.36 percent of the banking industry’s TLP during the period.

As the financial supervisor, the Bangko Sentral ng Pilipinas monitors the loan portfolio of all banking groups to assess trends that may potentially impact on the broader financial system. This is anchored on the BSP’s objective of promoting financial stability.

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