Thrift banks’ NPL ratio improves to 4.35% as of Nov

MANILA, Philippines - Thrift banks improved their bad loans ratio as of November last year as they continue to see a decrease in non-performing loans, the Bangko Sentral ng Pilipinas reported yesterday.

These banks recorded a non-performing loan ratio of 4.35 percent as of November, better than the 5.82 percent recorded in the same period in 2013.

NPLs are obligations left unpaid for at least 30 days after the due date. The NPL ratio, meanwhile, is the amount of bad loans computed against the total credit portfolio.

The improvement in thrift banks’ NPL ratio was a result of a 12 percent fall in their soured loans to P25.991 billion as of November from P29.537 billion in the same period in 2013.

At the same time, this was driven after an increase of 18 percent in thrift banks’ total loan portfolio to P597.124 billion as of November from P507.841 billion a year ago.

The BSP monitors the loan quality of banks to maintain high credit underwriting standards, which is key for keeping financial stability.

Central bank data also showed that thrift banks have set aside higher loan loss reserves during the period.

Their NPL coverage went up to 74.7 percent as of November from 68.63 percent in the same period in 2013.

Provisioning for bad loans is a prudential measure meant to mitigate against any potential credit losses, the central bank said.

Thrift banks boast of an P855.226-billion asset base as of November last year, while deposit liabilities amounted to P683.028 billion.

Latest BSP data also showed the resources of thrift banks jumped 13 percent to P866.3 billion as of September last year from P764.6 billion in the same period in 2013.

The increase in resources, which include deposits, profits, and retained earnings, indicate they have enough to cover funding needs and also to act as buffer against any potential shocks.