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Update on NPLs of Thrift Banks as of March 2003

06.25.2003

The thrift banking industry’s Non-Performing Loans (NPL) ratio rose to 12.72 percent from 12.24 percent last month as NPLs increased by 3.39 percent to P18.63 billion, while total loan portfolio (TLP) shrunk by 0.52 percent to P146.54 billion.

Non-Performing Assets (NPA) ratio also went up to 17.55 percent from 17.46 percent a month ago due to the 0.16 percent growth in NPAs and a 0.38 percent decline in Gross Assets (GA).

This month’s NPL and NPA ratios, however, remained lower than last year’s NPL and NPA ratios of 14.42 percent and 18.67 percent, respectively.

Net of Interbank Loans (IBL), NPL ratio stood higher at 13.08 percent compared to last month’s 12.77 percent as the 3.39 percent hike in NPLs outmatched the expansion in regular lending activities as manifested by the 0.96 percent increase in TLP (net of IBL).

Despite the uptrend in delinquent accounts, the industry cover for both NPLs and NPAs declined this period compared to the previous month. The 3.39 percent hike in NPL, and the accompanying reduction in Loan Loss Reserves (LLRs) by 3.02 percent to P7.39 billion, narrowed down NPL coverage ratio (LLR to NPL) to 39.67 percent from 42.29 percent the previous month. Similarly, NPA coverage ratio (LLR + provisions for ROPOA to NPA) receded to 18.52 percent from 19.10 percent last month as a result of the lowering of LLR and provisions for ROPOA by 2.92 percent to P8.43 billion, even as NPAs grew by 0.16 percent.

Restructuring continued to be pursued by the industry to address delinquent accounts as manifested by the 1.73 percent growth in gross Restructured Loans (RL) to P3.51 billion, which more than made up for the downsizing of loan portfolio by 0.52 percent. This raised RL to TLP ratio to 2.38 percent from 2.33 percent last month. Previous year’s ratio, however, stood higher at 2.71 percent.

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