Banks’ NPL ratio improves to 3.22% in January

MANILA, Philippines – The ratio of bad loans of universal and commercial banks to the industry’s total loan portfolio improved in January after falling to its lowest level in 13 years last year on the back of the country’s resilient eco-nomy that enabled household and corporate borrowers to pay their outstanding financial obligations.

The Bangko Sentral ng Pilipinas (BSP) reported yesterday that the non-performing loans (NPL) ratio of universal and commercial banks improved to 3.22 percent in January from 3.82 percent in the same month last year due to the drop in the value of soured loans as well as he expansion of the industry’s total disbursed loans.

Data showed that the value of soured loans retreated by 8.4 percent to P83.21 billion in January from P90.84 billion in the same month last year. The soured loans at the start of the year, however, was 2.8 percent higher than the December level of P80.91 billion.

On the other hand, the industry’s total loan portfolio (TLP) expanded by 8.53 percent to P2.58 trillion in January from P2.379 trillion in the same month last year. The loan portfolio was lower than the December level of P2.724 trillion.

Authorities said the country’s resilient economy and better corporate earnings as well as lower interest rates enabled borrowers to service their financial obligations.

The Philippines avoided recession last year despite the global economic meltdown. The country’s GDP eased to 0.9 percent last year from 3.8 percent in 2008. Consumer prices on the other hand eased to 3.2 percent last year from 9.3 percent in 2008 resulting to lower interest rates.

The gross assets of universal and commercial banks increased by 9.13 percent to P5.517 trillion in January from P5.055 trillion in the same month last year. The industry’s gross assets was slightly lower than the end-December level of P5.602 trillion.

Meanwhile, the industry’s non-performing assets (NPA) declined by 6.9 percent to reach P217.27 billion from P233.47 billion. The amount was higher than December’s P216.32 billion.

This resulted in a better NPA ratio of 3.94 percent in January from 4.62 percent in the same month last year.

Likewise, the loan loss reserve (LLR) of banks went up by 4.7 percent to P92.11 billion from P87.95 billion resulting in a better NPL coverage ratio of 110.7 percent from 96.82 percent as companies provided adequate provisioning against potential credit losses. –Lawrence Agcaoili (The Philippine Star)