Banks’ bad loans down to a 13-month low—BSP

The non-performing loan ratio of universal and commercial banks to total credits fell to 2.96 percent in December, the first time it dropped below 3 percent in 13 years, Bangko Sentral said Friday.

Bangko Sentral Deputy Gov. Diwa Guinigundo said the ratio improved from 3.26 percent in November and 3.52 percent in December 2008, as many corporate borrowers posted healthy profits in the fourth quarter.

“They were able to pay back their obligations on time,” Guinigundo told reporters in a news briefing at the central bank.

“It is also possible that with lower interest rate and lower inflation rate, households and corporations were able to pay their loans,” he added.

Non-performing loans refer to past due loan accounts whose principal or interest is unpaid for 30 days or more after due date. NPL ratio refers to the proportion of these past due accounts to total outstanding loans of banks.

Guinigundo said the latest NPL ratio was the lowest since December 1996, when it stood at 2.80 percent. Banks saw their bad loans shoot up to a double-digit level at the height of the Asian financial crisis in 1997 and 1998, which hurt the ability of companies to settle their debt.

Data showed that non-performing loans of banks declined 5 percent to P80.91 billion in December from P85.17 billion in November and P88.19 billion a year ago.

Total loan portfolio of banks grew to P2.725 trillion in December from P2.615 trillion in November and P2.502 trillion a year earlier.

Net of interbank loans, the NPL ratio also improved to 3.40 percent from 3.74 percent in November and 3.87 percent in December 2008.

“The month-on-month development transpired as the decline in NPLs came with the 4.63 percent expansion in regular loans to P2,38 trillion,” the central bank said.

Bangko Sentral also reported that the real and other properties acquired, or ropa, declined to P135.41 billion in December from P136.08 billion in November and P144.23 billion a year ago.

Ropa refers to the value of properties and stocks from settlements that were subject to bank foreclosure because of the borrowers’ inability to pay their loans.

The decline in ropa, together with the drop in non-peforming loans, reduced the value of non-performing assets by 2.23 percent to P216.32 billion as of December.

“As a result, the non-performing assets to gross assets ratio improved to 3.86 percent from 4.04 percent in November and 4.51 percent a year ago.

Meanwhile, the ratio of restructured loans to the total improved to 1.65 percent from 1.72 percent in November and 2.21 percent in December 2008. –Roderick T. dela Cruz, Manila Standard Today