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NPL Ratio of R/CBs Improves in Third Quarter


The NPL ratio of the rural and cooperative banking industry as of end-September 2005 improved by 0.36 percentage point to 11.50 percent from previous quarter’s 11.86 percent. This quarter’s ratio was also better by 0.11 percentage point from the 11.61 percent ratio a year ago.

The improvement resulted from the 4.7 percent expansion in total loan portfolio (TLP) which completely diluted the 1.5 percent hike in NPLs. Total NPLs stood at P8.02 billion from P7.90 billion at end-June 2005, while the industry’s loan portfolio was reported at P69.72 billion from the previous quarter’s P66.57 billion.

Across the three major geographical regions, R/CBs located in both Luzon and Visayas posted better loan quality at 11.62 percent and 12.90 percent from previous quarter’s 12.20 percent and 14.08 percent, respectively. On the other hand, R/CBs located in Mindanao reported higher NPL ratio at 10.20 percent from 9.34 percent last quarter. 

The ratio of restructured loans (RLs) to TLP went up to 1.28 percent from 1.22 percent last quarter as RLs expanded (9.8 percent) faster than TLP (4.7 percent). 

The ratio of real and other properties owned or acquired (ROPOA), gross to gross assets (GAs) ratio declined by 0.09 percentage point to 7.23 percent from last quarter’s 7.32 percent. This transpired as the 3.0 percent expansion in GAs outmatched the 1.7 percent growth in ROPOA to P8.27 billion. 

The non-performing assets (NPA) ratio improved to 14.29 percent from 14.49 percent last quarter. The pace of growth in GAs (by 3.0 percent) surpassed that of NPAs (by 1.6 percent). As of end-September 2005, total NPAs stood at P16.28 billion. 

The NPL coverage ratio strengthened to new heights at 38.68 percent from 37.43 percent last quarter. This came about as loan loss reserves grew by 4.9 percent to P3.10 billion, outpacing the 1.5 percent increase in NPLs.  

Likewise, the NPA coverage ratio was favorably higher at 20.75 percent from 20.15 percent last quarter as NPA reserves rose by 4.6 percent reaching P3.38 billion.

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