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Update on KB NPLs as of February 2003

04.14.2003

The commercial banking industry’s Non-Performing Loans (NPL) ratio in February 2003 improved by 0.04 percentage point to 15.08 percent from the previous month’s 15.12 percent. Year-on-year, this ratio is a significant improvement of 3.32 percentage points. Likewise, net of Interbank Loans (IBL), NPL ratio improved by 0.03 percentage point from 17.22 percent last month to 17.19 percent.

NPL level inched up by 1.36 percent or by P3.37 billion to P250.83 billion from P247.46 billion last month. This was primarily due to the 3.06 percent or P0.96 billion boost on the NPL of Government Banks, trailed by Other Private KBs and Private Domestic UBs. On the other hand, the re-definition of NPL brought about a P16.93 billion reduction in its level as against the previous month’s P17.09 billion.

There were sustained efforts in restructuring and foreclosure proceedings on collateral securities as means to settle or regularize problem accounts. As in the previous month, Restructured Loans (RL) marginally increased by 0.30 percent, or P0.39 billion to P129.51 billion, whereas Real and Other Properties Owned or Acquired (ROPOA) grew from last month by 0.36 percent, or P0.66 billion to P184.35 billion.

On the other hand, Total Loan Portfolio (TLP) expanded by a notable 1.62 percent, or P26.46 billion to P1,663.24 billion from P1,636.78 billion last month. Similarly, IBL substantially increased by 2.39 percent, or P4.76 billion to P204.16 billion from the previous month’s P199.40 billion. Thus, the industry sustained its regular lending activities as manifested by the 1.51 percent, or P21.70 billion increase in TLP, net of IBL, to P1,459.08 billion from P1,437.38 billion.

The NPL coverage ratio (Loan Loss Reserves to NPLs) fell to 50.16 percent as against last month’s ratio of 50.39 percent as the 0.91 percent marginal increase in LLR to P125.82 billion from P124.69 billion last month was outpaced by the 1.36 percent growth in NPL to P250.83 billion. Consistently, Foreign Branches had the highest coverage ratio at 157.80 percent, albeit lower than last month’s 160.42 percent.

Ratio of Gross RLs to TLP slid to 7.79 percent from 7.89 percent last month as the expansion in TLP by 1.62 percent to P1,663.24 billion outpaced the increase in gross RLs by 0.30 percent to P129.51 billion. Past due ratio of RLs deteriorated even further to 39.91 percent from the previous month’s 38.50 percent, surpassing last year’s 39.48 percent.

The ratio of ROPOA to Gross Assets (GA) remained at 5.67 percent as the level of ROPOA (gross) and GA barely moved from last month. ROPOA (gross) inched up by 0.36 percent, or P0.66 billion to P184.35 billion while GA gained by 0.50 percent, or P16.33 billion to P3,253.77 billion.

Overall asset quality slightly deteriorated with a 0.94 percent build-up of Non-Performing Assets (NPA) to P435.18 billion from P431.15 billion last month. Consequently, NPA ratio went up to 13.37 percent from 13.32 percent last month.

However, as the rise in NPA reserves (LLRs plus provision for ROPOA) by 0.84 percent to P136.01 billion was outpaced by the 0.94 percent uptick in NPA, the NPA coverage ratio (NPA valuation reserves to NPAs) narrowed by 0.03 percentage point from 31.28 percent to 31.25 percent this month.

Although past due ratio slightly deteriorated to 16.08 percent from 16.05 percent last month, there was an improvement of 3.21 percentage points from a year ago of 19.29 percent. Total past due loans (past due plus items in litigation) of the industry surged by 1.79 percent, or by P4.75 billion from last month’s level of P265.45 billion to P270.20 billion.

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