The combined non-performing loans (NPL) ratio of rural and cooperative banks as of end-December 2003 improved to 11.92 percent from 13.40 percent last quarter. This developed as the 9.4 percent decline in NPLs to P6.58 billion was complemented by the 1.9 percent rise in total loan portfolio (TLP) to P55.24 billion.
With the reduction in both restructured loans, gross and real and other properties owned or acquired (ROPOA), gross in the last quarter of 2003, the decline in NPLs meant actual collection on bad loans.
The improvement in the NPL ratio was evident across the three major geographical regions of Luzon, Visayas, and Mindanao. The Visayas region manifested the biggest drop in NPL ratio from last quarter at 2.25 percentage points to 12.9 percent, followed by Luzon at 1.57 percentage points to 12.26 percent and Mindanao at 0.71 percentage point to 9.83 percent.
Moreover, the non-performing assets (NPA) ratio of the industry at 15.18 percent was better than the last quarter’s 16.98 percent ratio. This transpired as NPAs fell by 8.0 percent to P13.91 billion from P15.12 billion as both NPLs and ROPOA, gross declined in the last quarter of 2003.
Year-on year, the industry made significant progress in bringing down the NPL ratio and the NPA ratio by 1.93 percentage points and 2.13 percentage points, respectively, from their 13.85 percent and 17.31 percent ratio at end-year 2002.
Meanwhile, the NPL coverage ratio and the NPA coverage ratio further strengthened to 36.46 percent and 18.67 percent, respectively. The NPL coverage ratio went up by 1.16 percentage points from 35.30 percent last quarter and by 1.68 percentage points from 34.78 percent last year. Likewise, the NPA coverage ratio was up by 0.43 percentage point from 18.24 percent last quarter and by 0.53 percentage point from 18.14 percent last year.