Banks’ bad loans ratio down to 3.52%

MANILA, Philippines – The accumulated bad loans of commercial banks continued to drop throughout 2008, ending the year with the total amount falling to 3.52 percent of the industry’s total loan portfolio.

The decline in the non-performing loans (NPLs) of universal and commercial banks was largely boosted by the recovery of the property sector which allowed them to unload large portions of their bad loans.

Data from the Bangko Sentral ng Pilipinas (BSP) showed that as of end-December 2008, the NPL ratio of universal and commercial banks (U/KBs) was the lowest recorded figure since the ratio peaked at 18.81 percent in end-October 2001.

The BSP said the decline in the ratio was due to the 4.84 percent decline in NPLs which was accompanied by the 1.33 percent expansion in total loan portfolio (TLP).

The BSP said actual NPLs dropped to P88.19 billion from November’s P92.68-billion level while TLP grew to P2.502 trillion from P2.469 trillion.

Exclusive of interbank loans, the NPL ratio eased to 3.87 percent from 4.15 percent in November and the 5.27-percent ratio in December 2007.

According to the BSP, the month-on-month decline was due to the drop in NPLs that came with the 1.97 percent growth in regular loans which ballooned to P2.277 trillion.

Moreover, the BSP said the proportion of real and other properties acquired (ROPA) by universal and commercial banks to their gross assets (GAs) ratio improved to 2.73 percent.

In November last year, this ratio was recorded at 2.76 percent and 3.33 percent in December 2008.

The monthly improvement was due to 1.57-percent hike in ROPA to P140.83 billion which was outweighed by the expansion in GAs.

The industry’s non-performing assets (NPA) to GAs ratio, on the other hand, dropped to 4.45 percent from November’s 4.61 percent and last year’s 5.22 percent ratios.

The month-on-month decline transpired as the one percent fall in NPAs was accompanied by the 2.69 percent growth in GAs.

The NPA level stood at P229.02 billion, down from November’s P231.33 billion and last year’s P239.74 billion.

The restructured loans (RLs) to TLP ratio dropped to 2.20 percent from last month’s 2.30 percent and last year’s 2.97 percent ratios. The decline in the ratio from last month was brought about by the 2.84 percent fall in gross RLs to P55.54 billion.

The industry provided adequate provisioning against potential credit losses.

The NPL coverage ratio strengthened to 100.01 percent from November’s 94.94-percent cover. Likewise, the NPA coverage ratio widened to 49.45 percent from the previous month’s 48.35 percent.

Year-on-year, this month’s NPL and NPA coverage ratios also fared better than their reference ratios of 93.33 percent and 44.04 percent, respectively. – Des Ferriols, Philippine Star