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Rural banks’ bad loans down |
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By Des Ferriols
The Philippine Star 04/17/2006 Rural and cooperative banks have managed to reduce their bad loans ratio to its lowest level since the 1997 Asian financial crisis, the Bangko Sentral ng Pilipinas (BSP) reported. As of end-Dec. 2005, the BSP said the non-performing loan (NPL) ratio of rural and cooperative banks (R/CBs) declined to 10.93 percent from 11.50 percent the previous quarter and in the same period the prior year. According to the BSP, the NPL ratio in the last quarter of 2005 was the lowest recorded since the 1997 crisis. The NPL ratio, at its peak, reached 20.41 percent in the quarter ending June 1999. The BSP said the improvement of the NPL ratio could be attributed to the simultaneous 2.9 percent decline in NPLs and 2.1 percent expansion in total loan portfolio (TLP). The BSP reported that the industry’s total NPLs went down to P7.78 billion from P8.02 billion at end-Sept. 2005 as a result of the banks’ efforts to reduce problem loans. The TLP, on the other hand, was higher at P71.18 billion from P69.72 billion of the previous quarter. A review of the NPL ratio in the three major geographical regions showed that R/CBs located in Mindanao continued to post better NPL ratio at 10.68 percent (up from 10.20 percent last quarter). On the other hand, the NPL ratio of Luzon banks went down to 10.83 percent from 11.62 percent while banks in the Visayas region managed to pare down their ratio to 11.88 percent from 12.90 percent. The BSP said there was also a decline in total restructured loans (by 5.2 percent) accompanied by an expansion in TLP which brought the ratio of restructured loans (RLs), gross to TLP, to 1.19 percent from 1.28 percent the previous quarter. The ratio of real and other properties owned or acquired (ROPOA) gross to gross assets likewise fell to 7.08 percent from 7.23 percent of the previous quarter due to the 2.64 percent growth in gross assets, which completely diluted the 0.7 percent increase in ROPOA, gross. The non-performing asset (NPA) ratio of cooperative and rural banks, on the other hand, further declined to 13.77 percent from previous quarter’s 14.29 percent and the previous year’s 14.89 percent ratio. The continuous improvement was due to the constant increase in gross assets (15.29 percent for the past year) and enhanced by the contraction in NPAs from last quarter. Notwithstanding lower loan reserves, the NPL coverage ratio strengthened to 38.83 percent from 38.68 percent last quarter. This was due to the decline of NPLs by 2.9 percent. The NPA coverage ratio settled at 20.55 percent from 20.75 percent last quarter. This developed as the two percent decline in NPA reserves outpaced the 1.1 percent reduction in NPAs. |
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