Banks’ NPL ratio down to 3.37%

THE BANKING industry’s bad debts remained below 4 percent of their total loan portfolio for the 20th month in a row, easing by 0.03 point to 3.37 percent in May from the April level.

Documents from the Bangko Sentral ng Pilipinas also showed that the non-performing loans (NPL) ratio also went down 0.32 point from 3.69 percent in May 2009.

According to the BSP, the change over the previous month developed amid a decrease in NPLs on the back of an increase in the total loan portfolio.

NPLs dipped to P86.62 billion in May or 0.18 percent from P86.78 billion in April.

On the other hand, the total loan portfolio rose to P2.57 trillion or 0.77 percent from P2.55 trillion.

Taking out loans among banks, the NPL ratio was also whittled down to 3.77 percent in May from 3.86 percent in the previous month and 4.2 percent from a year ago.

At the same time, the BSP observed regular loans rising 2.31 percent to P2.3 billion.

Also, the ratio of restructured loans to total loans went down to 1.63 percent from 1.74 percent in April and 2.03 percent in May last year.

Gross restructured loans fell 5.5 percent to P42.27 billion at a time of a rise in overall loans.

Further, the BSP found that banks provided enough provisioning against potential credit losses, with the coverage strengthening to 110 percent of bad debts from 108.7 percent in April.

Earlier this month, the BSP said bank lending rates have gone down by about 2.2 percentage points as of mid-May, reflecting 2 points of cumulative reduction in the central bank’s overnight lending rate.

Documents from the Monetary Board, the BSP’s policymaking body, showed that the key policy rate has gone down by 200 basis points to 6 percent since December 2008.

The move was meant to give borrowers greater access to funds in a bid to encourage economic activity during the global financial slump.

Banks have passed on the reduction to their borrowers, resulting in lending rates falling by 219.6 basis points as of the second week of May.

This showed a pass-through equivalent of 109.8 percent, according to the Monetary Board. –Ronnel Domingo, Philippine Daily Inquirer