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Savings Banks Decrease Bad Credit Loans Ratio

Tuesday, 27 January, 2009

THRIFT BANKS continued to post a single-digit nonperforming loan ratio as of the end of the third quarter of last year, central bank data showed.

Banks’ non-performing loan ratio (NPL), or bad credit loans in relation to total loans including interbank borrowings, registered at 6.47% in October, slightly lower than the 6.60% notched the previous month and the 6.80% achieved in October 2007. "The improvement from last month was due to the 3.78% contraction in NPLs," the Bangko Sentral ng Pilipinas explained in a statement yesterday.

"The industry was able to sustain a single-digit NPL ratio for the past 43 months; and pinned it below the pre-crisis ratio of 7.74% (as of end-June 1997) for the past 16 months," it added. Non-performing loans, or loans whose principal and interest remained unpaid 30 days after they fell due, declined to P18.855 billion in October from P19.596 billion in September and P21.422 billion in October the previous year.

Banks’ total loan portfolio, meanwhile, also decreased to P291.24 billion in October from P296.754 billion in September and P314.807 billion in the same month last year. Excluding interbank loans, thrift banks’ NPL ratio, however, was higher at 6.93% as of October, up from 6.91% in September but substantially lower than the 8.95% in October 2007.

Real and other properties acquired (ROPA), as well as non-performing assets, which include NPLs plus ROPA, declined as well as in October. ROPA refers to assets the banks have foreclosed or borrowers paid in dation for the settlement of loans. ROPA summed up to P27.019 billion as of October, down from P35.342 billion in October 2007 but up from P27.679 billion in September 2008.

NPAs, on the other hand, fell to P45.874 billion from P47.275 billion and P52.512 billion in September 2008 and October 2007, respectively.

Source: http://www.bworldonline.com/