Banks’ bad loan ratio eases on brisker lending growth

April 11 2011

By : Lailany P. Gomez, Fresh New Theme

THE bad loans ratio of the country’s largest banks improved in the first two months of the year as total loan portfolio grew past their non-performing loans (NPL) during the period.

In a statement, the Bangko Sentral ng Pilipinas (BSP) said the NPL ratio of universal and commercial banks improved to 2.93 percent in February, or 0.08 percentage points lower than January’s 3.01 percent, and 0.25 percentage points better than a year ago’s 3.18 percent.

The BSP noted than this was the 29th consecutive month that the NPL ratio has fallen below 4 percent.

The central bank attributed the improvement in banks’ loan quality to the 2.98 percent expansion in total loan portfolio compared with only 0.49 percent increase in bad loans.

Net of interbank loans, the bad loans ratio also eased to 3.18 percent in February from 3.24 percent the prior month and from 3.62 percent in February last year.

The BSP said that the lower ratio was attributed to the 2.42 percent rise in regular loans to P2.575 billion, which outweighed the increase in NPL.

The restructured loans to total loan portfolio ratio went down to 1.57 percent from January’s 1.65 percent and February last year’s 1.72 percent.

Real and other properties acquired (ROPA) as a percentage of gross assets improved to 2.02 percent from 2.06 percent in January and 2.38 percent ratio in February last year.

The non-performing assets (NPA) to gross assets ratio improved to 3.37 percent from January’s 3.42 percent and February last year’s 3.87 percent.

The industry provided adequate provisioning against potential credit losses, with the bad assets coverage ratio strengthening to 119.57 percent from January’s 117.47 percent.

Similarly, the NPA coverage ratio widened to 61 percent from January’s 59.94 percent. Year-on-year, both NPL and NPA coverage ratios also improved from their reference ratios of 111.50 percent and 55.60 percent.