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Banks' bad loans ratio rose to 15% in October |
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(December 21, 2003 - Monday, Philippine Daily Inquirer)
by Clarissa S. Batino BANKS' bad loans ratio deteriorated anew in Oct. to 15.16 percent as the level of non-performing loans (NPL) increased while credit slowed down as businesses held back expansion plans in light of political uncertainties. |
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NPLs of banks increased by 1.5 percent in October while the total loan portfolio went down by 3 percent, according to Philippine central bank Deputy Governor Alberto Reyes.
As of September, the total bad loans stood at 249.15 billion pesos while the loan portfolio was at 1.72 trillion pesos. Credit growth was only at 0.8 percent in October from 3.9 percent a month ago. Reyes pointed out that the NPL ratio as of October was substantially lower than the 16.36 percent a year ago. "The bad loans ratio had improved due to a more aggressive collection of banks as well as restructuring. Individual sale of foreclosed assets also contributed to the year-on-year decline," the Bangko Sentral ng Pilipinas deputy governor said. Although banks' NPLs had declined from a peak of almost 19 percent almost two years ago, the central bank was still worried that lenders had not been taking full advantage of the Special Purpose Vehicle Act to reduce their bad loans and foreclosed assets. The SPV law, which provides tax incentives to NPL take-outs, will expire after April 2005. Reyes said some banks have been selling their assets individually. He said about 6.2 billion pesos of these types of disposal had been approved by the Monetary Board, the policy-making body of the central bank. A year ago, NPLs stood at 266.84 billion pesos, an amount that already reflected the removal of roughly 30 billion pesos in accounts that were fully written off, which the BSP allowed to be deducted from the bad loans portfolio starting September 2002. Bad loans or NPLs are accounts whose principal or interests are unpaid for 90 straight days. Restructured loans of more than 130 billion pesos are taken out of the NPL folder. As of the third quarter, 12 of 41 commercial banks posted NPL ratios above the industry average. More notable were that of Philippine National Bank at 50 percent of total loans, Prudential Bank at 38.26 percent, Philippine Bank of Communications at 28.26 percent and Bank of Commerce at 27.68 percent. home | latest news |
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