Loan quality of the Commercial Bank Industry improved this July as reflected by the Non-Performing Loans (NPL) ratio, which dropped to 17.77 percent this month from 18.06 percent last month as NPL levels dropped by 0.98 percent from P289.0 billion to P286.1 billion even as Total Loan Portfolio (TLP) grew by 0.63 percent from P1,600.1 billion to P1,610.2 billion. Net of interbank loans (IBL), NPL ratio also declined to 20.47 percent from last month’s 20.83 percent.
Expansion in lending this month was largely influenced by accelerated lending of Foreign Banks by P15.6 billion and Government Banks by P4.0 billion, which completely offset the net contraction in Private Domestic Banks which aggregated P9.6 billion.
Increased provisioning for Loan Loss Reserves (LLRs) grew by 0.68 percent from P136.8 billion last month to P137.7 billion this month despite the 0.98 percent or P2.8 billion drop in NPLs propping up the coverage ratio (LLRs to NPLs) by 0.80 to 48.12 percent from 47.32 percent last month.
The growth in gross restructured loans (RLs) by 3.17 percent or P3.7 billion outmatched the 0.63 percent increase in the TLP causing the ratio of RLs to TLP to inch up to 7.45 percent from last month’s 7.26 percent.
The 0.70 percent contraction in gross assets (GA) to P3,125.5 billion from P3,147.6 billion last month weighed down on the increased holdings of ROPOA (gross) by 2.42 percent to P171.9 billion from last month’s P167.8 billion. This caused the ratio of ROPOA to gross assets to rise to 5.50 percent from 5.33 percent.
There was a slight deterioration in overall asset quality as manifested by the 0.14 percentage point increase in the non-performing assets (NPA) ratio from 14.51 percent last month to 14.65 percent this month. Non-performing assets (NPL plus gross ROPOA) which increased by 0.27 percent were outpaced by the 0.70 percent drop in gross assets.
NPA coverage ratio (LLRs plus provisions for ROPOA divided by NPAs) improved to 32.0 percent from 31.8 percent last month as the increase in the NPA reserves (LLRs plus provision for ROPOA) by 0.79 percent to P146.4 billion from P145.3 billion last month more than covered the 0.27 percent rise in the NPA.