Banks trim down bad loans in September

MANILA, Philippines – The non-performing loans (NPL) ratio of the country’s universal and commercial banks improved to 3.11 percent in September from the previous month’s and year ago ratio of 3.25 percent, the Bangko Sentral ng Pilipinas (BSP) reported over the weekend.

The September NPL ratio marks the 24th consecutive month that the NPL ratio has been below four percent, the BSP also said.

Monetary authorities attributed the improvement in the September NPL ratio to the 2.07-percent expansion in total loan portfolio.

NPLs fell to P83.14 billion from the previous month’s P84.91 billion while the total loan portfolio expanded to P2.67 trillion from P2.616 trillion previously, BSP data also showed.

Net of interbank loans (IBL), the NPL ratio also improved to 3.46 percent in September from the previous month’s 3.67 percent and year ago’s 3.74-percent ratio. The month-on-month improvement was due to the 3.74-percent growth in regular loans to P2.399 trillion.

The ratio of real and other properties acquired (ROPA) declined by 0.04 percent in September to P128.51 billion.

This, together with the NPLs, brought down non-performing assets (NPA) by 0.85 percent to P211.65 billion which then led to an improvement in the NPAs to gross assets ratio to 3.65 percent from the previous month’s 3.77 percent.

This month’s NPA ratio is also better than the 4.14-percent ratio posted last year, BSP data also showed.

Furthermore, the BSP said that the restructured loans (RLs) to the total loan portfolio (TPL) ratio went down to 1.64 percent from last month’s 1.68 percent and year ago’s 1.84-percent ratio. The ratio declined from last month as the 0.85 percent fall in gross RLs to P44.05 billion accompanied the rise in loans.

Universal and commercial banks or the country’s biggest banks provided adequate provisioning against potential credit losses.

As such, the NPL coverage ratio strengthened to 117.13 percent from last month’s 114.52 percent. Likewise, the NPA coverage ratio widened to 59.57 percent from last month’s 59.17 percent. Year-on-year, this month’s NPL and NPA coverage ratios also fared better than their reference ratios of 111.27 percent and 53.48 percent, respectively. –Iris C. Gonzales (The Philippine Star)