The nonperforming loans (NPL) ratio of universal and commercial banks (U/KBs) improved to 2 percent as of end-October 2012, lower by 0.05 percentage point from the previous month’s 2.05-percent ratio.

The industry’s NPL ratio was achieved through a combination of a decline in the amount of NPL and the continuing rise in total loan portfolio.

The NPL ratio of P69.12 billion in October is 1.17 percent lower than the P69.94 billion registered a month earlier. The industry’s total loans, on the other hand, increased by 1.43 percent from P3.410 trillion to P3.459 trillion during the same period.

The Bangko Sentral ng Pilipinas said on Tuesday that it welcomed the banking industry’s continuing action to take an active position in the area of setting up loan loss reserves.

The industry said that the ratio of U/KBs stood at 138.73 percent in October. The high NPL coverage ratio, taken together with the decline in NPL ratio, provides a strong indication that U/KBs continue to take proactive steps in ensuring the strength of their loan portfolios.

The restructured loans (RLs) to loan portfolio ratio slowed to 0.98 percent from last month’s 1.03 percent.

It also said that real and other properties acquired (ROPA), gross-to-gross assets (GAs) stood to 1.55 percent from last month’s 1.54 percent and, from year ago’s 1.80 percent ratio.

The month-on-month development in the ratio occurred as a result of the simultaneous 0.1-percent growth in ROPA and the expansion in GAs.

The nonperforming assets (NPA) to gross assets ratio declined to 2.55 percent from last month’s 2.56 percent, and from year ago’s 3.03 percent ratio.

U/KBs also said that month-on-month, the ratio was lower since the 0.01-percent contraction in NPAs was accompanied by the 2.55-percent decline in GAs to P6.916 trillion from P6.887 trillion.
The industry’s provisioning against potential credit losses remained adequate.

The U/KBs said that the NPL coverage ratio (loan loss reserves to NPLs) strengthened to 138.73 percent from last month’s 136 percent, and from year ago’s 119.07 percent ratio.

Meantime, the NPA coverage ratio (NPA reserves to NPA) grew to 69.63 percent from last month’s 69.39 percent but widened from year ago’s 62.15-percent ratio.