Banks’ NPL ratio improves to 3.97% in October 2008

The non-performing loan (NPL) ratio of local commercial banks improved to 3.97 percent in October 2008 as banks cleaned up their portfolio and expanded their lending operations.

The Bangko Sentral ng Pilipinas (BSP) reported yesterday that as of end-October 2008, the non-performing loan (NPL) ratio of universal and commercial banks (U/KBs) improved by 0.07 percentage point to 3.97 percent from 4.04 percent in September.

Compared with the 2007 level, the BSP said the improvement was even more significant as the ratio shed 1.33 percentage points from its 5.30 percent ratio.

The BSP said the month-on-month drop in the NPL ratio came from the 0.44-percent decline in NPLs that accompanied the 1.28-percent expansion in total loan portfolio (TLP).

According to the BSP’s October report, the NPLs of the country’s largest banks went down to P93.58 billion from P94 billion in September last year while the TLP climbed to P2.357 trillion from P2.327 billion.

Net of interbank lending, the BSP said the NPL ratio also eased to 4.47 percent from 4.56 percent in September last year and the 6.17-percent level over the same month in 2007.

The BSP said the decline in the NPL ratio was further complemented by the 1.47 percent growth in regular loans to P2.091 trillion.

Meanwhile, the BSP reported that the real and other properties acquired (ROPA) to gross assets (GAs) ratio fell 2.87 percent from the September level of 2.93 percent and the 2007 level of 3.56 percent.

The drop in ROPA meant that banks had less troubled assets in their portfolio compared with previous periods and when related to their total assets.

The BSP said the month-on-month improvement was the result of the fact that the ROPA level barely changed at P142.49 billion in relation to the larger expansion in GAs.

On the other hand, the BSP said the proportion of the industry’s non-performing assets (NPA) to its GAs also eased to 4.78 percent from 4.89 percent in September 2008 and the 5.74-percent ratio in the same month in 2007.

According to the BSP, this resulted from the 0.13 percent decline in NPAs which was accompanied by the 2.20 percent expansion in GAs. The NPA level settled at P236.07 billion, down from P236.39 billion in September and P250.93 billion in October 2007.

The UKB industry’s restructured loans (RLs) to TLP ratio went down to 2.44 percent from the previous month’s 2.47 percent and 2007’s 3.54 percent ratios.

The BSP said the month-on-month decline in the ratio transpired as the 0.05 percent growth in gross RLs to P57.98 billion was outweighed by the larger expansion in loans. –Des Ferriols, Philippines Star