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KB NPLs as of December 2002 Reached its Seven-Month Low

02.21.2003

The December 2002 Non-Performing Loans (NPL) ratio reached its seven-month low at 14.95 percent, down by 1.15 percentage points from last month’s amended ratio of 16.10 percent and by 2.40 percentage points from 17.35 percent a year ago. Net of Interbank Loans (IBL), NPL ratio also posted a 1.09 percentage point decline to 17.14 percent from 18.23 percent last month. Sans the re-definition, the NPL ratio was still an improvement of 1.03 percentage points at 15.76 percent from last month’s ratio of 16.79 percent per BSP Circular No. 202.

NPL level was down by 5.97 percent or by P15.56 billion to P245.10 billion from P260.66 billion last month. About P15.77 billion this month was deducted from the NPL level due to the re-definition versus P13.33 billion last month. Otherwise, NPL levels under the previous definition would have been P260.87 billion, still lower by 4.79 percent or by P13.12 billion from last month’s P273.99 billion.

As in the previous month, the reduction in NPL level was also achieved through restructuring and foreclosure proceedings, as well as actual collections. Restructured Loans (RL) marginally increased by 0.36 percent, or P0.47 billion, to P128.05 billion, whereas Real and Other Properties Owned or Acquired (ROPOA) grew from last month by 3.10 percent, or P5.51 billion, to P183.03 billion.  On the other hand, past due level went down by 4.73 percent, or P12.88 billion, to P259.69 billion.

Total Loan Portfolio (TLP) rose from last month by 1.27 percent, or P20.59 billion, to P1,639.38 billion. IBL primarily accounted for such increase with a whopping growth of 10.74 percent, or P20.27 billion, to P209.05 billion from the previous month’s P188.78 billion. Thus, only minimal regular lending activities were sustained as TLP, net of IBL, increased by 0.02 percent, or P0.32 billion, to P1,430.33 billion.

The NPL coverage ratio (Loan Loss Reserves to NPLs) further improved to 51.19 percent as against last month’s ratio of 48.22 percent. Although the level of LLR slightly decreased by P0.24 billion, from P125.70 billion last month to P125.46 billion, the substantial reduction in NPL level by P15.56 billion, to P245.10 billion, resulted to a higher NPL coverage ratio at end-December 2002.

Ratio of Gross RLs to TLP slid down to 7.81 percent from 7.88 percent last month. While the level of gross RLs rose by P0.47 billion to P128.05 billion, the significant growth in the level of TLP by P20.59 billion, to P1,639.38 billion, caused the decline in the gross RLs to TLP ratio. Past due ratio of RLs continued its downtrend to 37.05 percent from the previous month’s 38.30 percent and last year’s 38.69 percent.

The ratio of ROPOA to Gross Assets (GA) was at 5.56 percent, up by a mere 0.06 percentage point from the previous month’s 5.50 percent with the growth in the level of ROPOA (gross) by 3.10 percent, or P5.51 billion, to P183.03 billion from P177.52 billion last month.

There was a sustained improvement in the overall asset quality with the drop in Non-Performing Assets (NPA) by 2.29 percent to P428.13 billion which induced a 0.58 percentage point reduction in the NPA ratio from 13.64 percent last month to 13.06 percent. Sans the redefinition, this ratio would have been 13.48 percent or higher by 0.42 percentage point.

Moreover, NPA coverage ratio (NPA valuation reserves to NPAs) increased from 30.84 percent last month to 31.67 percent with a 0.34 percent uptick in the NPA reserves (LLRs plus provision for ROPOA), or P0.46 billion, to P135.60 billion from P135.13 billion last month. The NPA coverage ratio under the old definition showed a higher ratio of 34.10 percent.

Past due ratio improved to 15.69 percent from 16.70 percent last month as total past due loans (past due plus items in litigation) of the industry declined by 4.73 percent, or by P12.88 billion, from last month’s level of P272.57 billion to P259.69 billion. Likewise, past due ratio had substantially gone down by 2.11 percentage points from 17.80 percent at end-December 2001.

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