Small banks Q3 NPLs up 0.49%

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Bad loans ratio down at 12.24%

Combined gross non-performing loans (NPLs) at rural and cooperative banks grew slightly in the third quarter of 2014 from the year-earlier level, but the NPL ratio eased as overall loan portfolios expanded, the central bank said on Monday.

According to data from the Bangko Sentral ng Pilipinas (BSP), small banks’ bad loans at end-September increased by 0.49 percent to P16.48 billion from P16.40 billion a year earlier.

On a quarterly basis, gross NPLs at rural and cooperative banks dropped by 7.78 percent from P17.87 billion recorded as of the end of June.


The central bank did not suggest specific reasons for the year-on-year and quarter-on-quarter movements of bad loans at small banks, but noted a rise in total loan portfolios.

The BSP data showed the total loan portfolio of rural and cooperative banks expanded by 1.30 percent to P134.61 billion in September from P132.98 billion posted at the end of the second quarter.

NPL ratio down at 12.24%
As a percentage of the total loan portfolio (TLP) of small banks, NPLs declined to 12.24 percent in September from 13.45 percent in June, and were also lower than the 12.93 percent NPL-to-TLP ratio in the same period last year.

“The third-quarter figure improved from the 13.45 percent gross NPL ratio registered a quarter earlier as the amount of NPLs carried by rural and cooperative banks decreased amid a rise in their TLP,” the BSP stated.

The bulk of loans from small banks went to economic sectors such as agriculture, hunting, forestry and fishing; wholesale and retail trade; loans to individuals for consumption purposes; and real estate, renting and business activities, the BSP said.

Loan-loss reserves remain high
As a buffer against potential credit losses, the banks’ loan-loss reserves stood at 57.58 percent of their gross NPLs in September, slightly higher than the comparative ratio of 57.31 percent posted at the end of the second quarter, the BSP said.

From an industry perspective, the loans extended by rural and cooperative banks represented 2.49 percent of the entire banking system’s TLP of P5.42 trillion in September.

Meanwhile, NPLs of small banks comprise 0.30 percent of the industry’s TLP during the period.

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