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Update on KB NPLs as of January

03.08.2002

The Non-Performing Loans (NPLs) ratio of the 44 Commercial Banks in January 2002 moved up to 18.30 percent, 0.95 percentage points higher than the 17.35 percent in December 2001 and 2.30 percentage points higher than last year’s ratio of 16.00 percent. Loan quality was downgraded as a result of the P8.1 billion or 2.9 percent rise in NPLs, from P281.9 billion last month to P290.0 billion, and the simultaneous drop in Total Loan Portfolio (TLP) by P40.1 billion or 2.5 percent from previous month’s P1,625.1 billion to P1,584.9 billion.

Incremental NPLs of Private Domestic EKBs (P8.0 billion) to a large extent influenced the 2.9 percent or P8.1 billion rise in the industry’s NPLs. With the exception of Government Banks, all other groups posted loan cuts aggregating to P62.6 billion (Private Domestic EKBs – P40.3 billion, Foreign Branches – P10.8 billion and Other Private KBs – P11.5 billion).

Thirty (30) banks reported higher NPL ratio compared to only fourteen (14) banks last month. Moreover, seventeen (17) banks exceeded the industry ratio with thirty-two (32) banks posting double-digit ratios compared to only 10 banks with single digit ratios.

With the exception of Government Banks whose NPL ratio improved to 16.67 percent from 17.84 percent last month, all groups posted higher ratio levels of 21.07 percent, 5.18 percent and 23.29 percent from previous month’s 19.41 percent, 4.77 percent, and 22.82 percent for Private Domestic EKBs, Foreign Branches and Other Private KBs, respectively.

Loan Loss Reserves which dropped by 0.6 percent or P767.0 million from P127.4 billion to P126.6 billion together with the 2.9 percent or P8.1 billion rise in NPLs reduced coverage ratio (LLRs divided by NPLs) to 43.7 percent from 45.2 percent last month. Last year’s ratio stood at 42.7 percent.

Gross restructured loans (RLs) further increased by 1.5 percent to P114.7 billion from P113.0 billion last month. With the simultaneous 2.5 percent drop in TLP, RLs rose to 7.2 percent of TLP from last month’s 7.0 percent. Past due portion of gross RLs moved up to 39.4 percent from 38.7 percent last month.

Holdings of gross ROPOA stood at P158.0 billion, a contraction of P527.0 million or 0.3 percent from P158.6 billion last month (from P133.5 billion a year ago) which was outweighed by 1.3 percent or P40.9 billion drop in gross assets. This raised ratio of gross ROPOA to gross assets to 5.1 percent from 5.0 percent last month. Likewise, ROPOA also increased to 9.1 percent of ROPOA plus TLP from last month’s 8.9 percent.

Overall asset quality slightly weakened as reflected by non-performing assets ratio (NPAs (NPLs plus gross ROPOA) to gross assets) which increased to 14.4 percent from previous month’s 14.0 percent on account of the 1.7 percent rise in NPAs from P440.5 billion to P448.1 billion and the simultaneous 1.3 percent drop in gross assets. The rising level of NPAs during the period was further aggravated by the downturn in the asset performance of the industry.

Using another broad definition of loan quality, the ratio of NPL plus current restructured loans plus gross ROPOA to TLP plus ROPOA rose to 29.7 percent from 28.6 percent last month and last year’s 26.0 percent.

NPA coverage ratio (NPA reserves divided by NPAs) narrowed at 29.9 percent from 30.6 percent as NPA reserves (loan loss reserves plus provision for ROPOA) were trimmed down by 0.6 percent to P134.0 billion from last month’s P134.9 billion even as NPAs rose by P7.6 billion or 1.7 percent.

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