Banks' bad loans up slightly in November

The commercial banking system's non-performing loans (NPLs) went up slightly to 14.61 percent as of end-November 1999, from 14.50 percent a month ago, the Bangko Sentral ng Pilipinas (BSP) reported over the weekend.

In real terms, the industry's total loans that turned sour amounted to P226.7 billion as against the system's total loan portfolio which amounted to P1.552 trillion (this includes banks' interbank loans).

BSP Gov. Rafael B. Buenaventura, however, assured that the banks' NPL level for December 1999 will improve due to an increase in loan demand.

The BSP also reported the industry's loan loss reserves (LLR) went up to P81.4 billion but the coverage ratio (which is NPL divided by LLR) remained at 35.9 percent.

The overall asset quality of the commercial banking system deteriorated slightly as the ratio of non-performing assets (NPA) to total assets inched up to 11.6 percent in November from 11.5 percent in October last year.

The level of non-performing assets of commercial banks amounted to P307.1 billion while the system's total assets stood at P2.651 billion.

At their current levels, the BSP said the asset quality in local commercial banks compared favorably with regional banks.

Sources said the deterioration of the peso against the dollar was one of the factors for the slight increase in banks' bad loans as some borrowers again found themselves squeezed by a higher foreign exchange cost. -