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Update on KB NPLs as of August 2002

10.11.2002

Loan quality of the Commercial Bank industry improved this August as reflected by the drop in the Non-Performing Loans (NPL) ratio to 17.58 percent this month from 17.75 percent last month. NPL levels dropped by 1.81 percent from P285.79 billion to P280.62 billion whereas Total Loan Portfolio (TLP) slid to P1,596.11 billion, a 0.87 percent decline from last month’s P1,610.19 billion. The drop in NPL volume may be attributed to foreclosure and restructuring proceedings instituted as ROPOA and current restructured loan (RL) levels grew by P3.82 billion and P5.89 billion, respectively. Likewise, NPL ratio (net of interbank loans) also dropped to 20.19 percent as against the previous month’s 20.44 percent.

Except for Other Private KBs which posted an increase in lending by P0.46 billion, all the other subgroups registered significant decreases in their lending portfolio, namely: Foreign Branches (P7.98 billion), Private Domestic UBs (P4.44 billion), and Government Banks (P2.11 billion).

The coverage ratio (Loan Loss Reserves to NPLs) rose to 49.29 percent from 48.17 percent last month with additional loan loss provisioning of P0.65 billion coupled with a P5.17 billion drop in NPLs.

Gross restructured loans inched up to 7.89 percent of TLP from 7.45 percent last month due to the 4.95 percent or P5.94 billion growth in restructured loans and made more pronounced by the 0.87 percent or P14.08 billion decline in TLP.

The ratio of ROPOA to gross assets (GA) swelled to 5.61 percent with the growth in ROPOA by 2.22 percent to P175.67 billion from last month’s P171.85 billion outmatched the insignificant 0.23 percent increment in GA.

 The overall asset quality was manifested by the 0.08 percentage point decrease in the non-performing assets (NPA) ratio to 14.56 percent. NPA (NPL plus gross ROPOA) slid down by 0.30 percent, accompanied by a 0.23 percent rise in GA.

NPA coverage ratio (NPA valuation reserves divided by NPAs) was up from 31.99 percent last month to 32.27 percent this month as the increase in the NPA reserves (Loan Loss Reserves plus provision for ROPOA) by 0.56 percent to P147.24 billion from P146.42 billion last month more than covered the 0.30 percent drop in the NPA. 

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