Banks' NPL ratio unchanged

MANILA, Philippines - The non-performing loans (NPL) ratio of universal and commercial banks was practically unchanged at 3.50 percent in August from 3.49 percent in July, well below the 3.90 percent ratio over the same month in 2008.

The Bangko Sentral ng Pilipinas (BSP) said the slight month-on-month increase could be traced to a P960-million increase in the total NPLs of universal and commercial banks to P83.84 billion in August from P82.88 billion in July.

The total NPLs of banks in August was P7.83 billion lower than the P91.67 billion NPLs recorded in the same month last year. NPLs refer to past due loan accounts whose principal and/or interest is unpaid for 30 days.

The total loan portfolio (TLP) of universal and commercial banks grew by P21 billion to P2.397 trillion in August from P2.376 trillion in July and by P47 billion compared to P2.35 trillion in August last year.

Net of interbank loans (IBL), the BSP said the NPL ratio was unchanged at 3.99 percent although this was an annual improvement from the 4.49 percent ratio in August last year.

NPL ratio refers to the ratio of NPLs to TLP inclusive of interbank loans.

The central bank said the ratio remained unchanged from July’s 3.99 percent as the growth of NPLs was matched by the 1.77-percent expansion in regular loans to P2.1 trillion.

The BSP reported that the proportion of real and other properties acquired (ROPA) to gross assets (GA) fell by 1.04 percent to P138.3 billion translating to a lower level of non-performing assets (NPA) of P222.14 billion in August from P222.63 billion in July.

This resulted in an improved NPA to GA ratio of 4.29 percent from 4.35 percent. NPAs refer to the sum of NPL and real and other properties owned and acquired (ROPOA).

Furthermore, the restructured loans to TLP ratio dropped to 1.93 percent in August from two percent in July and 2.51 percent last year due to the 2.36-percent reduction in gross restructured loans to P46.8 billion from P47.93 billion.

In terms of provisioning for bad loans, the BSP said the NPL coverage ratio strengthened to 105.31 percent in August from 104.98 percent in July while the NPA coverage ratio widened to 52.01 percent from 51.52 percent.

Monetary authorities believe the asset quality of the banking system would remain sturdy despite the full impact of the global economic meltdown that started with the financial crisis in the United States late last year.

They believe that Philippine banks have already tightened their credit standards precisely to ensure that they would not end up accumulating bad loans.