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NPL Ratio of Rural and Coop Banks Declines Slightly

12.18.2015

The gross non-performing loans (NPLs) ratio of rural and cooperative banks (RCBs) represented 11.90 percent of their total loan portfolio (TLP) at end-June this year.

The latest NPL ratio declined slightly from the 12.04 percent registered at end-March this year as RCBs’ gross NPLs decreased at a faster rate than their TLP quarter-on-quarter.

RCBs’ gross NPLs of Php 14.25 billion in June dropped from the Php 16.76 billion reported a quarter earlier. Meanwhile, the banks’ TLP slid to Php 119.78 billion in June from the Php 139.14 billion reported in March this year.

To mitigate credit risks, the RCB industry set aside loan loss reserves equivalent to 62.51 percent of its gross NPLs at end-June this year. This is higher than the 57.56 percent NPL coverage ratio registered in March.

Among economic sectors, the largest recipients of loans from RCBs were agriculture, forestry and fishing; wholesale and retail trade; loans to individuals for consumption purposes; and real estate activities, which accounted for 69.7 percent of the banks’ TLP in June this year.

The Bangko Sentral ng Pilipinas looks into the loan quality of banks as part of its supervisory efforts to promote sound credit underwriting standards and financial stability.

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