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U/KBs' NPL Ratio at the Lowest

01.16.2006

The universal and commercial banking (U/KBs) industry’s non-performing loan (NPL) ratio as of end-November 2005 improved to 8.74 percent from 9.65 percent at end-October 2005.  This month’s ratio is the lowest in more than seven and a half years and the 6th in a series of monthly single-digit NPL ratios.

The month-on-month improvement came from the 4.7 percent decline in NPLs that was complemented by a 5.2 percent increase in total loan portfolio (TLP).  Total NPLs stood at P164.30 billion from P172.35 billion at end-October 2005, while the industry’s TLP was reported at P1,879.09 billion from the previous month’s P1,786.20 billion.

Net of interbank loans, the NPL ratio also favorably declined to 10.50 percent from last month’s 11.51 percent ratio.  This development came from the 4.5 percent expansion in regular lending that accompanied the reduction in NPLs.

Restructured loans (RLs) to TLP ratio dipped to 5.62 percent from 5.99 percent last month on the back of a 1.0 percent decline in loan restructuring.  Meantime, with a slower 0.3 percent reduction in non-performing RLs over the month, the ratio of non-performing RLs to total RLs rose to 48.51 percent from 48.15 percent at end-October 2005. 

Real and other properties owned or acquired (ROPOA), gross to gross assets (GAs) ratio fell to 4.99 percent from last month’s 5.12 percent and year ago’s 5.45 percent ratio.  This transpired as the 0.7 percent month-on-month and 4.2 percent year-on-year cuts in ROPOA came simultaneously with the rise in GAs.  As of end-November 2005, the industry’s ROPOA settled at P198.75 billion.

Following the decline in NPL and ROPOA, the industry’s non-performing assets (NPA) ratio improved to 8.93 percent from 9.32 percent last month.  This resulted from the 2.5 percent drop in NPAs that was complemented by the 1.8 percent growth in GAs.

Meantime, the NPL and NPA coverage ratios stood lower at 72.72 percent and 39.40 percent, from the previous month’s 73.65 percent and 40.11 percent, respectively.  These ratios, however, are still far better than last year’s NPL coverage ratio of 53.35 percent and NPA coverage ratio of 32.76 percent.  Loan loss reserves at end-November 2005 stood at P119.48 billion, while the NPA reserves were reported at P139.55 billion. 

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