by Maricel E. Burgonio Senior Reporter

BAD loans of universal and commercial banks as a share of their total outstanding loans eased in September, the Bangko Sentral ng Pilipinas (BSP) said Friday.
In a statement, the BSP said the nonperforming loan (NPL) ratio of the industry dropped to 3.25 percent in September from 3.50 percent in August.

“The improvement occurred as the 2.90-percent decline in NPLs was complemented by the 4.51-percent expansion in total loan portfolio,” the BSP said.

NPLs refer to loan accounts whose principal and/or interest is unpaid for 30 days or more after due date.
Universal and commercial banks accounted for almost 90 percent of the total resources of the banking system.

Their NPLs fell to P81.42 billion in September from P83.84 in August, while their total loan portfolio grew to P2.505 trillion from P2.397 trillion over the same period.

The industry’s outstanding loans, excluding reverse repurchase agreements (RRP), grew 5.9 percent to P2.178 trillion in September from P2.103 trillion in August.

Banks’ real and other properties acquired (ROPA) also dropped to 2.59 percent of their gross assets in September from 2.66 percent the previous month. This was due to the 2.53-percent expansion in gross assets to P5.311 trillion, or faster than the 0.06-percent growth in ROPA to P138.39 billion.

As a result, the nonperforming assets to gross assets ratio of the industry improved to 4.14 percent from 4.29 percent previously. Banks’ bad assets reached P219.80 billion in September, lower than the P222.14 billion in August.

Restructured loans also fell to P46.49 billion in September from P46.80 billion in August.

The industry provided adequate provisioning against potential credit losses, with their NPL coverage ratio rising to 111.27 percent from last month’s 105.31 percent.