• Small banks Q2 bad loans up 12% on-year

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    NPL ratio at end-June up at 13.45%
    Non-performing loans (NPLs) at rural and cooperative banks rose 12 percent in the second quarter of 2014 from the year-earlier level, with the NPL ratio also up as of end-June, the central bank said on Wednesday.

    The central bank did not give a reason for the rise in the bad loans’ level.

    Instead, data from the Bangko Sentral ng Pilipinas (BSP) highlighted the 1.36 percent quarter-on-quarter drop in the small banks’ gross NPLs to P17.87 billion as of the end of June from P18.11 billion recorded at end-March.

    “The 1.36 percent quarter-on-quarter decrease in the banks’ gross non-performing loans was a welcome development following the three previous quarters wherein NPLs increased quarter-on-quarter,” the BSP said in a statement accompanying the data.

    Compared with the year earlier, however, bad loans at end-June showed a 12 percent increase from the previous P15.91 billion.

    NPL ratio up at 13.45%
    As a percentage of the total loan portfolio (TLP) of small banks, NPLs climbed slightly to 13.45 percent in June from 13.14 percent in March, and were likewise higher than the 12.36 percent NPL-to-TLP ratio in the same period last year.

    The central bank traced the rise in the NPL ratio to the decline in the total loans of small banks during the covered period.

    The BSP data showed the total loan portfolio of rural and cooperative banks at P132.89 billion in June, down 3.63 percent from the level at the end of the first quarter.

    Loan-loss reserves down
    As a buffer against potential credit losses, the banks’ loan-loss reserves amounted to 57.31 percent of their gross NPLs in June, lower than the comparative ratio posted at the end of the first quarter and a year earlier, the BSP said.

    From an industry perspective, the loans extended by rural and cooperative banks represented 2.55 percent of the entire banking system’s TLP of P5.2 trillion in June.

    “The Bangko Sentral ng Pilipinas assesses the loan quality of all banking groups as part of its efforts to maintain high standards for credit risk management. This is essential to the promotion of a strong and stable financial system,” the central bank said.

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