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Update on NPLs of Thrift Banks

10.12.2005

As of end-July 2005, the loan quality of the thrift banking industry continued to improve as the NPL ratio dropped to 8.69 percent from 8.86 percent last month as the 1.3 percent rise in NPLs was surpassed by the 3.3 percent growth in total loan portfolio (TLP). This month’s ratio was also an improvement from 11.67 percent a year ago.  

Exclusive of interbank loans, the NPL ratio also improved further to 9.29 percent from last month’s 9.38 percent and year ago’s 12.05 percent. This transpired as the month-on-month growth in NPLs was outmatched by the 2.3 percent expansion in regular loans to P178.27 billion.  

The ratio of real and other properties owned or acquired (ROPOA) to gross assets improved to 10.13 percent from last month’s 10.36 percent and year ago’s 11.53 percent. This developed as the 0.1 percent contraction in ROPOA from last month was complemented by the 2.2 percent rise in gross assets.  

The restructured loans (RLs) to TLP ratio declined to 2.28 percent from last month’s 2.32 percent and year ago’s 2.56 percent. The month-on-month contraction in ratio came about as the 1.2 percent hike in RLs to P4.37 billion was surpassed by the growth in loans.

The non-performing assets (NPA) ratio favorably declined to 13.98 percent from 14.27 percent last month and from the 16.88 percent ratio posted a year ago. The 2.2 percent expansion in gross assets this month outpaced the 0.1 percent increase in NPAs.

The NPL coverage ratio further strengthened to 42.92 percent from 42.88 percent last month and from the 38.54 percent ratio a year ago as loan loss reserves favorably expanded to P7.11 billion from P7.01 billion last month.

The NPA coverage ratio was also enhanced to 19.16 percent from 18.89 percent last month and from the 17.49 percent ratio a year ago. This favorable development was mainly brought about by the increase in NPA reserves to P9.13 billion from P8.99 billion last month.

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