Banks’ bad loan ratio improves in second quarter


The gross nonperforming loans (NPLs) of thrift, rural and cooperative banks improved in the second quarter of the year, data from the Bangko Sentral ng Pilipinas (BSP) showed on Thursday.

The banks’ combined NPLs represented 7.32 percent of their total loan portfolio (TLP). Thrift, rural and cooperative banks recorded a TLP of P597.57 billion at the end of the second quarter of 2013.

“The gross NPL slightly improved from the 7.77 percent in March 2013 as the banks’ NPLs declined by less than 1 percent amid a 5-percent quarter-on-quarter rise in TLP,” the central bank stated.

Meanwhile, the BSP data also showed that banks’ loan loss reserves (LLR) for the soured loans stood at 68.26 percent of NPLs in end-June from the 66.52-percent figure posted in March 2013.

“Provisioning for NPLs is a prudential measure for mitigating potential credit losses,” the monetary authority said.

The BSP said that thrift, rural and cooperative banks loans represented 10.76 percent, 2.74 percent and 0.22 percent, respectively, of the Philippine banking system’s TLP. The country’s banking system posted a TLP of P4.36 trillion in June.

Thrift banks posted a 5.94-percent gross NPL ratio in June, lower than the 6.13 percent registered in March this year. The BSP said that the drop in gross NPL ratio was matched by a rise in the banks’ LLR, which grew to 72.28 percent in June from 70.43 percent last quarter.

Rural banks, on the other hand, recorded a gross NPL ratio of 12.36 percent in June, higher than the 11.83 percent posted a year ago. The banks’ LLR for soured loans, however, decreased to 59.65 percent in June from 61.54 percent a quarter ago.

Meanwhile, cooperative banks’ gross NPL ratio dropped to 12.38 in June from 28.46 percent in March, while its loan loss provisioning increased to 81.26 percent of NPLs from 55.63 percent during the same period.

“The monitoring of banks’ loan quality is part of measures to ensure that financial intermediaries continue to adhere to high credit standards,” the BSP said.


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