Bad loan ratio picks up amid slower growth in overall lending

THE quality of loans of the country’s largest banks edged up at end-September as their total loan portfolio declined past their non-performing loans, the Bangko Sentral ng Pilipinas said.

In a statement, the BSP said the non-performing loans ratio of universal and commercial banks in the first nine months rose to 2.55 percent compared with 2.52 percent in the first eight months. Year-on-year, the ratio however went down by 0.56 percentage points from 3.11 percent. The month-on-month hike stemmed from the 1.14 percent decline of the total loan portfolio to P3.023 trillion, which was accompanied by a 0.03 percent increase in NPLs to P76.99 billion.

Net of interbank loans, the bad loans ratio also rose by 0.03 percentage point to 2.71 percent from the end-August figure of 2.68 percent, but improved from end-September of last year’s 3.46 percent. The central bank attributed the uptick to the 0.03 percent increase in NPLs combined with the 0.99 percent decline in regular loans to P2.839 trillion.

Restructured loans remained at 1.34 percent, but lower than a year ago’s 1.64 percent owing to the 0.57 percent increase in gross restructured loans balanced by the contraction in total loan portfolio. Real and other properties acquired as a share of gross assets improved to 1.81 percent at end-September from 1.82 percent at end-August and 2.21 percent in the first nine months of 2010.

The central bank attributed the month-on-month movement to the 0.77 percent cut in ROPA, which outpaced the drop in gross assets to P6.447 trillion.

Similarly, the non-performing assets ratio eased to 3.02 percent ate end-September from 3.03 percent at end-August and 3.65 percent in the first nine months of last year.

The month-on-month decline was attributed to the 0.45 percent reduction in NPAs compared with the 0.07 percent fall in gross assets.

The BSP said the industry’s provisioning against potential credit losses remained adequate, with NPL coverage ratio at 112.50 percent, wider than 121.50 percent at end-August and 117.13 percent at end-September last year.

The NPA coverage ratio also improved to 63.04 percent from 62.31 percent in August and 59.57 percent in September last year. –LAILANY P. GOMEZ, Manila Times