Banks’ NPL ratio down to 8.51%

The universal and commercial banks’ overall bad loans ratio fell to its lowest level in eight years, the Bangko Sentral ng Pilipinas (BSP) reported over the weekend.

According to the BSP, the proportion of the non-performing loans (NPLs) of universal and commercial banks (u/kbs) to their total loan portfolio dropped to 8.51 percent at the end of December 2005, from 8.76 percent the previous month.

The drop was even bigger compared to 2004 level, the BSP said, when the NPL ratio was at double-digit levels. Over the same period, the ratio was at 12.72 percent.

The BSP said the drop in the NPL ratio was a result of the 2.7-percent decline in the industry’s total NPL and the 0.2 expansion in total loans of banks.

The BSP reported that U/KBs reduced their total NPL burden from P164.25 billion in November to P159.81 billion in December. Total loan portfolio, on the other hand, was virtually unchanged at P1.878 trillion compared to P1.784 trillion the previous month.

Net of interbank loans, the BSP said the NPL ratio of the U/KB industry was also better at 10.38 percent compared to 10.52 percent in December and November respectively. Last year, the ratio was 14.84 percent.

On the other hand, the restructured loans to the total loan portfolio likewise fell to 5.25 percent due to the 5.5 percent decline in restructured loans.

Non-performing RLs, according to the BSP, fell at an even faster rate of 6.4 percent, driving the cutback in the non-performing RLs to total RLs ratio to 48.7 percent.

Likewise, the BSP said that with the improvements in the industry’s loan portfolio, the ratio of real and other properties owned or acquired (ROPOA), gross to gross assets slightly dropped to 4.86 percent from 4.87 percent the previous month.

The BSP reported that the industry’s non-performing assets was also lower at 8.62 percent from 8.8 percent following the simultaneous 1.1 percent fall in NPAs and one percent expansion in the industry’s gross assets.

Year on year comparison showed a significant 19.8 percent reduction in problem assets that brought an even greater cut in the U/KBs’ NPA ratio from 11.41 percent at the end of 2004.

As of year-end 2005, the BSP said the total NPAs stood at P344.96 billion from P430.39 billion at the end of December 2004.