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Banks boost loan portfolio by 5.9% to P1.8 T in Feb. |
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The Manila Bulletin 05/09/2005
The banking sector’s total loan portfolio as of end-February rose 5.9 percent to R1.818 trillion from R1.758 trillion a year before, the Bangko Sentral ng Pilipinas reported over the weekend. Also in the same period the industry’s loan loss reserves stood at P137.49 billion from February 2004’s R130.137 billion while nonperforming asset reserves totalled P153.819 billion from P144.384 billion. The BSP reported that banks non-performing loans or NPL ratio for the same period improved by 0.75-percentage point to 11.79 percent from January’s NPL ratio of 12.54 percent. This was a result of the simultaneous 5.4 percent decline in NPLs and the 0.7 percent growth in loan portfolios. The central bank said the substantial reduction in NPLs was mainly due to the completed bulk sales totalling P14.33 billion to special purpose vehicles under the Special Purpose Vehicle Act of 2002. BSP Deputy Governor Amando M. Tetangco Jr. said this is why the SPV Law must be extended by another two years as soon as possible to benefit banks, which has to unload soured assets as soon as possible to clean up their balance sheets. The official target is to wipe out R100 billion of bad assets of the estimated R200 billion plaguing the industry since the 1997 Asian financial crisis. If the P200-billion bad loans are obliterated, Tetangco said this would bring down NPL ratio from 12 percent to 7.5 percent. So far, NPAs transferred to SPVs have reached P93.203 billion. BSP Deputy Governor Nestor A. Espenilla Jr. said he also supports the proposal approved by the Committee on Banks and Financial Institutions and the Committee on Ways and Means of the House of Representatives of extending the deadline for the creation of SPVs. Banks boost loan portfolio by 5.9% to P1.76 T in Feb. The law expired last April 8 and banks want the tax breaks extended so they offload remaining bad loans and improve their capital adequacy. The BSP said earlier that it would increase the capital provisioning requirement for banks’ NPAs to encourage them to unload more of their bad loans. The provisioning requirement for non-performing housing loans will be raised from 50 percent to 75 percent this year until 2006 and to 100 percent by 2007. In the meantime the provisioning requirement for all the other types of loans will be hiked to 125 percent this year until 2006 and to 150 percent by 2007. The SPVA is intended to help banks dispose of their NPAs by granting tax exemptions and reduced registration and transfer fees. Banks sell their NPAs to qualified SPVs or individuals in order to avail of these privileges. Congress is now working to extend this privilege by two more years. |
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