Universal and commercial banks’ (U/KBs) non-performing loan (NPL) ratio was back on a downtrend with a 0.72 percentage point favorable decline to 7.36 percent as of end-May 2006 from 8.08 percent in the previous month. Year-on-year, this month’s ratio was also significantly better by 3.59 percentage points from the 10.95 percent ratio at end-May 2005.
This improvement over the month was driven by the 6.51 percent reduction in NPLs and the 2.65 percent expansion in the industry’s total loan portfolio (TLP). At end-May 2006, U/KBs’ NPLs were down by P9.83 billion to P141.13 billion as a result of banks’ increase in loans exempted from non-performing classification under BSP Circular No. 351 (P5.30 billion), NPL sales (P3.74 billion), write-offs and loan settlements. Meanwhile, TLP grew to P1,917.06 billion from P1,867.50 billion driven by the P46.44 billion increment in regular loans.
Exclusive of interbank loans (IBL), the industry’s NPL ratio (exclusive of IBL) likewise dropped to 8.87 percent from the previous month’s 9.77 percent and year ago’s 12.84 percent.
The ratio of restructured loans (RLs) to TLP slid to 5.10 percent from month ago’s 5.32 percent after total RLs contracted by 1.38 percent. Meanwhile, the 1.32 percent reduction in non-performing RLs drove the non-performing RLs to total RLs ratio slightly higher by (0.02 percentage point) to 46.71 percent. As of end-April 2006, total RLs stood at P98.84 billion while non-performing RLs were at P46.17 billion.
Real and other properties owned or acquired (ROPOA), gross declined by 2.20 percent over the month, influencing the 0.25 percentage point cut in ROPOA, gross to gross assets (GA) ratio to 4.71 percent from previous month’s 4.96 percent. As of end-May 2006, U/KBs’ total foreclosed properties was at P192.35 billion.
The industry’s non-performing asset (NPA) ratio slid to 7.97 percent from 8.56 percent last month. This was on account of the 4.10 percent decline in NPAs and the 2.98 percent expansion in GAs. Compared against last year’s 9.86 percent, this month’s ratio was also better by 1.89 percentage points. As of 31 May 2006, the industry’s NPAs stood at P324.08 billion, P13.85 billion lower than last month’s P337.93 billion and P68.94 billion lower than last year’s P393.02 billion.
The NPL and NPA coverage ratios similarly fell to 77.63 percent (from 78.32 percent) and 40.15 percent (from 41.40 percent), respectively. These transpired after the 7.33 percent and 7.00 percent reductions in loan loss reserves (LLRs) and NPA reserves overwhelmed the 6.51 percent decline in NPLs and 4.10 percent drop in NPAs. Despite these, however, both ratios posted significant improvements over end-May 2005’s 64.21 percent NPL coverage ratio and 37.97 percent NPA coverage ratio. As of 31 May 2006, total LLRs amounted to P109.56 billion while NPA reserves stood at P130.10 billion.