Thrift, small banks NPL ratios improve

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Bad loans held by thrift banks increased as of end-June from a year earlier while those held by rural and cooperative banks declined, Bangko Sentral ng Pilipinas (BSP) data released on Friday showed.

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Taken as a proportion of their total loan portfolios, however, the non-performing loan (NPL) ratios for both thrift banks and rural/cooperative banks posted an improvement.

NPLs are defined as past due loans where the principal or interest is unpaid for 30 days or more after the due date, including the outstanding balance of loans payable in monthly installments when three or more installments are in arrears.

The central bank said it monitors banks’ loan quality “in line with its broader objective of fostering sound credit risk management, which is essential to financial stability.”

In absolute terms, thrift bank NPLs increased to P29.95 billion as of the end of the first half from P27.29 billion three months earlier and P27.16 billion in June last year.

The NPL ratio, however, eased to 4.69 percent, down from 4.83 percent a year earlier but higher than the 4.54 percent recorded at end-March, as the total loan portfolio rose to P638.15 billion from P600.98 billion in March.

The total loan portfolio as of end-June also exceeded the P562.85 billion recorded a year earlier.

Thrift banks were said to have provisioned 71.63 percent of gross NPLs as of end-June, which lower than the 74.96 percent seen in March but higher than the 70.27 percent registered a year earlier.

Gross NPLs across economic sectors remained manageable and were seen in real estate activities, and loans to individuals for consumption purposes, which accounted for 64.1 percent of the industry’s total loan portfolio in June, the central bank said.

Bad loans held by rural and cooperative banks (RCBs), meanwhile, fell to P14.25 billion as of end-June 2015 from a year earlier.

These accounted for 11.90 percent of their total loan portfolio during the period, an improvement from the 13.45 percent recorded a year earlier.

Small banks’ total loan portfolio rose to P119.78 billion from P132.89 billion in 2014.
Even as their bad loans ratio dropped, small banks also increased their loan-loss reserves to 62.51 percent as of end-June from 57.31 percent a year earlier.

Among economic sectors, the largest recipients of loans from rural and cooperative banks were agriculture, forestry and fishing; wholesale and retail trade; loans to individuals for consumption purposes; and real estate activities, accounting for 69.7 percent of the banks’ total loan portfolio, the central bank said.

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