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Update on KB NPLs as of May

07.05.2002

The NPL ratio of the commercial banking system as of month-end May 2002 further rose by 0.20 percentage points to 18.43 percent from last month’s 18.23 percent, and 1.62 percentage points from last year’s 16.81 percent, as NPL levels grew by 1.4 percent or P4.2 billion, outpacing the 0.3 percent or P4.5 billion loan growth. Net of interbank loans (IBL), NPL ratio also increased to 21.16 percent from last month’s 20.81 percent.

Even as total loan portfolio (TLP) grew by 0.3 percent to P1,657.0 billion from P1,652.6 billion last month, loan quality slightly deteriorated, caused by the 1.4 percent growth in NPL levels which this month rose to P305.5 billion from P301.3 billion last month. Except for branches of Foreign Banks whose NPLs shrank further by P480.0 million, all groups followed an uptrend led by Private Domestic Expanded KBs (by P3.1 billion), followed by Government Banks (by P856.0 million) and Other Private KBs’ (by P656.0 million).

Loan loss reserves (LLRs) which rose by 2.5 percent or P3.4 billion more than covered for the 1.4 percent increase in NPLs boosting coverage ratio (LLRs to NPLs) to 44.4 percent from last month’s 43.9 percent.

Gross restructured loans (RLs) rose to P118.1 billion from P114.6 billion, up by 3.0 percent or P3.5 billion pushing up RLs to TLP ratio to 7.1 percent from 6.9 percent last month. However, past due portion of RLs dropped to 42.7 percent from 43.1 percent last month.

Holdings of Real and Other Properties Owned and Acquired (ROPOA, gross) increased by 1.4 percent or P2.3 billion outpacing the 0.3 percent or P10.1 billion growth in gross assets. This caused the ratio of ROPOA (gross) to gross assets to increase to 5.34 percent from 5.29 percent last month. Likewise, ROPOA also rose to 9.2 percent of ROPOA plus TLP from last month’s 9.1 percent.

Overall asset quality as measured by non-performing assets ratio (NPAs [NPLs plus gross ROPOA] to gross assets) deteriorated to 15.1 percent from 14.9 percent last month as NPAs grew by 1.4 percent or P6.4 billion while gross assets increased by only 0.3 percent.

NPA reserves (loan loss reserves plus provision for ROPOA) increased by 3.0 percent to P144.1 billion from P140.0 billion last month surpassing the 1.4 percent rise in NPAs. As a result, NPA coverage ratio (NPA reserves divided by NPAs) improved to 30.4 percent from 30.0 percent last month.

Using an even broader definition of loan quality, the ratio of NPL plus current restructured loans plus gross ROPOA to TLP plus ROPOA inched up to 29.7 percent from last month’s 29.3 percent. Last year’s ratio stood at 27.1 percent.

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