GNPL ratio at nine-month low


Universal and commercial banks (U/KBs) showed strong credit risk management as their gross nonperforming loan (GNPL) ratio was on a nine-month low.

In a statement on Thursday, the Bangko Sental ng Pilipinas (BSP) said that the GNPL ratio of U/KBs was recorded at 2.7 percent in May, and has been below or equal to 3 percent.

Gross NPLs represent the actual level of NPL without any adjustment for loans treated as “loss,” and is fully provisioned.

“The latest figure is consistent with the longer-term trend of a general decline in the amount of GNPLs. While this is already an indication of strong credit risk management on the part of U/KBs, the trend is made more impressive by the fact that the total loan portfolio continues to rise,” the BSP stated.

As of May 2013, the TLP of U/KBs was at P3.7 trillion with gross NPLs amounting to P101.4 billion.

In contrast, comparative year-end 2012 TLP and gross NPLs were at P3.6 trillion and P100.6 billion, respectively.

The central bank added that U/KBs continue to proactively set aside reserves for potential losses from loans, as the value of loan loss reserves (LLR) as of May 2013 for U/KBs was at P130.3 billion and translates into a gross NPL coverage ratio of 128.5 percent.

“The NPL coverage ratio measures LLR as a percentage of GNPL. At current levels of the GNPL coverage ratio, banks have effectively set aside a greater amount of funds than their outstanding NPLs,” it said.

Meanwhile, the net NPL (NNPL) ratio has remained nearly constant. As of May, the NNPL ratio was at 0.4 percent and the year-to-date ratios have been within a very narrow band between 0.43 percent and 0.45 percent.

NNPLs is just the gross NPLs less specific allowance for credit losses on TLP. It is derived by deducting loan-loss provisions for specific accounts from gross NPLs.

“Across economic activities, there is also a generally declining trend in the respective GNPL ratios. This is evident in major economic activities such as financial intermediation, real estate, manufacturing as well as wholesale and retail trade. These four are particularly important to U/KBs since they collectively represent 62.4 percent of the TLP of these banks,” BSP explained.


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