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Update on KB NPLs as of November

01.16.2002

The Non-Performing Loans (NPLs) of the 44 Commercial Banks in November 2001 slightly increased by P2.6 billion or 0.9 percent to P294.0 billion from P291.4 billion in October 2001. This was outweighed by simultaneous growth of total loan portfolio (TLP) of 1.1 percent to P1,566.7 billion this month from last month’s P1,549.1 billion resulting in a slightly improved NPL ratio of 18.76 percent, 0.05 percentage points lower compared to 18.81 percent last month. Year ago ratio stood lower at 16.26 percent. However, net of Interbank Loans (IBL), NPL ratio increased to 20.78 percent from last month’s 20.68 percent.

The P2.6 billion rise in NPLs was largely traced to increments posted by Private Domestic EKBs (P2.1 billion), Other Private KBs (P262.0 million) and Government Banks (P334.0 million). Meanwhile, growth in TLP of Private Domestic EKBs (P11.3 billion), Other Private KBs (P494.0 million) and Government Banks (P6.7 billion) totaling P18.5 billion covered for the P870.0 million loan reduction of Foreign Branches.

Among the notable improvements in this month’s profile, only 45 percent of the operating banks reported higher NPL ratios compared to 61 percent last month, whereas 48 percent from 34 percent a month ago registered lower NPL ratio levels.

This month’s coverage ratio (Loan Loss Reserves (LLRs) to NPLs) was also upgraded to 42.5 percent from 42.2 percent last month, as the increase in loan loss reserves of P2.1 billion or 1.7 percent outpaced the P2.6 billion or 0.9 percent rise in NPLs.

Likewise, gross restructured loans (RLs) dropped to 7.1 percent of TLP (from 7.2 percent last month) as gross RLs tapered off by P193.0 million or 0.2 percent to P111.2 billion from P111.4 billion while TLP expanded by P17.6 billion or 1.1 percent. Past due portion of gross RLs improved to 44.4 percent from 44.5 percent last month.

The rise in holdings of real and other property owned or acquired (ROPOA) (gross) by 1.9 percent (from P151.1 billion to P153.9 billion) outpaced the rise in gross assets (total assets plus loan loss reserves plus provision for ROPOA) by 0.9 percent raising the ratio of ROPOA to gross assets to 4.92 percent from 4.87 percent last month. Likewise, ROPOA also increased to 8.94 percent of ROPOA plus TLP from last month’s 8.89 percent.

Overall asset quality as measured by the ratio of non-performing asset (NPA) deteriorated to 14.32 percent from 14.28 percent last month as growth in non-performing assets (NPL plus gross ROPOA) by 1.2 percent to P447.8 billion from P442.4 billion a month ago exceeded 0.9 percent rise in gross assets.

Using another broad definition of loan quality, the ratio of NPL plus current restructured loans plus gross ROPOA to TLP plus ROPOA slightly improved to 29.6 percent from 29.7 percent last month and last year’s 25.3 percent.

Banks provisioning for NPAs followed an uptrend as reflected by the growth of NPA reserves, i.e., loan loss reserves and provisions for ROPOA, from P109.1 billion last year to P130.0 billion a quarter ago to P132.4 billion this quarter. The 1.8 percent rise in NPA reserves this quarter outmatched the 1.2 percent increment in NPAs. This boosted NPA coverage ratio (NPA reserves divided by NPAs) to 29.6 percent from 29.4 percent a quarter ago and 28.6 percent same quarter last year.

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