THE bad loans ratio of the country’s largest banks continued to improve at-end June as their total loan portfolio grew faster than their non-performing loans (NPL).

In a statement, the Bangko Sentral ng Pilipinas (BSP) said the NPL ratio of universal and commercial banks eased by 2.45 percent at end-June, lower by 0.35 percentage point from the previous month’s 2.80 percent and by 0.76 percentage point from year ago’s 3.21-percent ratio.

The BSP said the June’s ratio was the lowest since December 1996 ratio of 2.80 percent.

Month-on-month, the end-June ratio declined because of the 9.48-percent drop in non-performing loans (NPL) to P74.14 billion.

The banks’ total loans reached P3.03 trillion at end-June, up 3.46 percent from May and 13 percent higher from the year before.

Net of interbank loans, the bad loans ratio also eased to 2.62 percent from last month’s 3 percent and year ago’s 3.64-percent ratio.

On a month-on-month basis, the ratio declined as the reduction in NPL was complemented by the 3.46-percent increase in regular loans to P2.82 trillion from P2.73 trillion last month.

The restructured loans to total loan portfolio ratio went down to 1.36 percent from last month’s 1.39 percent and year ago’s 1.67-percent ratio.

The month-on-month decline in the ratio was attributed to the faster expansion in total loan portfolio compared with the 0.77-percent growth in gross restructured loans.

The ratio the real and other properties acquired (ROPA), gross to gross assets ratio stood at 1.86 percent, better than last month’s 1.94 percent and year ago’s 2.26-percent ratio.

The improvement in the ratio from last month was due to the 1.50-percent drop in ROPA.

The non-performing assets (NPA) to gross assets ratio improved to 3.03 percent from last month’s 3.26 percent and year ago’s 3.78 percent ratio.

The decline in the ratio from last month was due to the reduction in NPA combined with an increase in gross assets.

The industry provided adequate provisioning against potential credit losses.

The bad loans coverage ratio, loan loss reserves to NPLs, strengthened to 126.17 percent as of end-June 2011 from last month’s 123.31 percent and year ago’s 108.99-percent ratio.