Small banks NPL ratio rises to 12.04%

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RURAL and cooperative banks posted non-performing loans (NPLs) that comprised 12.04 percent of their total lending for the quarter to end-March 2015, rising from an 11.85 percent ratio in the preceding quarter but falling from 13.14 percent a year earlier, data released by the central bank on Tuesday showed.

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In absolute terms, the amount of small banks’ bad loans dropped 7.45 percent to P16.76 billion at end-March from P18.11 billion a year earlier. But from the preceding quarter, the end-March gross NPL level increased by 2.2 percent from P16.40 billion recorded at end-December.

The Bangko Sentral ng Pilipinas (BSP) did not cite specific reasons for the year-on-year fall and quarter-on-quarter increase in NPLs in March, but noted a rise in the banks’ total loan portfolio (TLP).

Total Q1 loans up
The BSP data showed that the total loan portfolio (TLP) of rural and cooperative banks grew 0.91 percent to P139.14 billion in March from P137.89 billion a year earlier. The TLP was also up from the preceding quarter, or 0.51 percent higher than P138.44 billion as posted as of end-December 2014.

The bulk of the loans went into agriculture, forestry and fishing; wholesale and retail trade; loans to individuals for consumption purposes; and real estate, the BSP said.

As a buffer against potential credit losses, the banks’ loan-loss reserves stood at 57.56 percent of their gross NPLs in March, down from 58.30 percent posted at end-December 2014.

“In line with the financial stability agenda, the Bangko Sentral ng Pilipinas monitors the loan quality of banks as part of its broader efforts to promote sound credit risk management among these lenders,” it said.

’Not alarming’
Focusing on the year-on-year comparisons, a private analyst said the latest NPL ratio at rural and cooperative banks does not show any cause for alarm for now.

“The numbers don’t show a significant cause for concern as the March 2015 figure sh ows a lower NPL ratio compared with the same period in 2014,” said Nicholas Antonio Mapa, associate economist at the Bank of the Philippine Islands (BPI).

The lower loan-loss reserves of the banks also do not look alarming, he said.

“The BSP has several tools and measures to safeguard healthy banking through supervision, as well as the full complement of its monetary policy toolkit,” Mapa added.

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