Rural banks’ bad loan ratio up in Sept.

The bad loan ratio of rural banks went up in January to September last year as the loan portfolio contracted faster than the decline in nonperforming loans (NPL), Bangko Sentral ng Pilipinas (BSP) said Tuesday.

In a statement, the BSP said rural banks NPL ratio increased to 10.13 percent in September, 0.19 percent higher than the previous quarter’s 9.94 percent.

Total NPL level declined to P9.91 billion in September from P9.960 billion in end-June last year and P8.537 billion in September 2007.

Total loan portfolio, meanwhile, declined to P97.819 billion in September last year from P100.210 billion in June last year and P86.592 billion in September 2007.

Rural lenders in Mindanao exhibited better loan quality at 7.18 percent compared with rural banks in Luzon and Visayas, which registered 11.32 percent and 9.15 percent, respectively.

The central bank said the industry resorted to foreclosure proceedings to bring down the delinquency ratio as real and other properties acquired (ROPA) increased by 17 percent to P15.66 billion from P13.35 billion in June.

The ratio of ROPAs went up to 9.69 percent in September from 8.21 percent in June.

With higher delinquent loans and ROPA, the non-performing assets (NPA) expanded by 11.60 percent to P21.83 billion.

As a result, the ratio of soured assets moved up to 13.56 percent in September from 12.06 percent in June.

Meanwhile, rural banks’ past due ratio moved up to 12.15 percent in September from 11.80 percent in June last year and 12.09 percent in September 2007.

Based on BSP’s latest report, rural banks posted higher profits in the first half of 2008, reaching P1.9 billion, P0.1 billion higher than the P1.8 billion in the first semester of 2007.

There are 836 rural banks in the country recorded in the first half of the year. The largest number of rural bank offices is located in the National Capital Region, which account for 41.3 percent of total.

Since December last year, the BSP has closed 15 rural banks. Of the total, about 13 banks were under the Legacy group while two more rural banks were closed in Pampanga.

The BSP has been advising the public to avoid making sweeping judgments on the condition of individual banks based on pure speculation as these would then lead to self-fulfilling prophecies.
–Maricel E. Burgonio, Manila Times