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Still a Single-Digit NPL Ratio for Universal and Commercial Banks


As of end-October 2005, the universal and commercial banking (U/KBs) industry’s non-performing loan (NPL) ratio increased to 9.65 percent from last month’s 9.43 percent.  Nonetheless, this month’s NPL ratio is still better by 4.56 percentage points than year ago’s 14.21 percent ratio.

 The movement in this month’s ratio resulted from the 1.0 percent increment in NPLs to P172.35 billion. This was accompanied by a reduction of 1.2 percent in total loan portfolio (TLP) to P1,786.20 billion. 

Net of interbank loans, the NPL ratio also went up to 11.51 percent from 11.34 percent last month. This developed as the expansion in NPLs came along with the 0.5 percent reduction in regular lending activity. Year-on-year, however, this month’s ratio is still an improvement of 5.33 percentage points from the previous 16.84 percent. 

As the decline in TLP outmatched the 0.7 percent contraction in restructured loans (RLs) to P107.59 billion, the ratio of RLs to TLP inched up to 5.99 percent from last month’s 5.95 percent.   Meanwhile, the industry’s holdings of non-performing RLs increased by 4.1 percent to P51.81 billion, bringing to 48.15 percent (up from 45.93 percent last month) the ratio of non-performing RLs to total RLs. 

The ratio of real and other properties owned or acquired (ROPOA), gross to gross assets (GAs) rose to 5.12 percent from 5.07 percent last month. This was brought on by the 1.0 percent decline in GAs even as ROPOA barely moved to P200.13 billion. 

Spurred by the 0.5 percent increment in non-performing assets (NPAs) and simultaneous contraction in GAs, the industry’s NPA ratio rose to 9.32 percent from 9.19 percent last month.  This month’s ratio is still favorably lower by 2.87 percentage points from year ago’s 12.19 percent ratio.

Meantime, the industry’s NPL and NPA coverage ratios stood at 73.65 percent (down from 74.55 percent as of end-September 2005) and 40.11 percent (down from 40.23 percent), respectively.  On a year-on-year basis, both coverage ratios significantly progressed from the previous 52.61 percent and 32.55 percent, respectively.  Loan loss reserves at end-October 2005 amounted to P126.94 billion while the NPA reserves was reported at P145.76 billion.


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