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Bank loans up 1.73 percent in May to P1.867 trillion |
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By LEE C. CHIPONGIAN
The Manila Bulletin 07/18/2005 The universal and commercial banking sector’s total loan portfolio as of end-May was up 1.73 percent to P1.867 trillion from P1.810 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 P131 billion while non-performing asset reserves totaled P393 billion. In the meantime the thrift bank segment as of January this year reported total loans of P171.439 billon or 7.98 percent higher from the previous year’s P158.763 billion. The central bank also reported that the loan portfolios of rural and cooperative banks last year rose 12.24 percent to P61.903 billion from P55.149 billion in 2003. BSP Governor Amando M. Tetangco Jr. said banks’ non-performing loans ratio as of May continued to improve, declining by 0.29 percentage point to 10.95 percent from 11.24 percent in April. "This ratio (10.95 percent) will still go down," he told reporters Friday. In the meantime thrift banks’ NPL ratio as of end January was 10.81 percent from 10.96 percent previously, while rural banks’ NPL ratio also improved to 11.50 percent as end-December in 2004 from 11.61 percent. Bad asset reports including NPL ratio indicators from thrift and rural banks are reported late due to the numbers and distance of the surveyed banks. The most updated of these banking indicators are usually the universal and commercial banks whose main offices are located in Manila. The central bank said the substantial reduction in NPLs was mainly due to the completed bulk sales to special purpose vehicles under the Special Purpose Vehicle Act of 2002. Tetangco 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 P100 billion of bad assets of the estimated P200 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 11 percent to 7.5 percent. So far, NPAs transferred to SPVs have reached P93.203 billion. The BSP 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. 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 to dispose of their NPAs by granting tax exemptions and reduced registration and transfer fees. |
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