Tuesday, June 16, 2009 | MANILA, PHILIPPINES [ BusinessWorld Online ]
BY PAOLO LUIS G. MONTECILLO, Reporter
THE LEVEL of bank loans-gone-sour relative to total bank loans increased in April as more borrowers failed to make payments for loans.
In a statement, the Bangko Sentral ng Pilipinas (BSP) said the ratio of commercial banks’ non-performing loans (NPL) to total loans increased 0.09 percentage points to 3.65% from last month’s 3.56%.
Despite the month-on-month increase, which indicates deterioration in loan quality, the ratio was still an improvement over the 4.28% ratio in the same month last year.
"This is the seventh consecutive month that the NPL ratio has been kept below 4%," the BSP said in a statement.
NPLs are loans whose principals have remained unpaid a month after it has fallen due.
The month-on-month hike in the ratio came as the 2.03% decline in total NPLs failed to outpace the 4.45% contraction in banks’ total loan portfolio.
NPLs eased to P86.78 billion from P88.58 billion in March, while total loans dropped to P2.376 billion from P2.485 billion.
Excluding interbank loans, commercial banks’ NPL ratio reached 4.11% from last month’s 3.98%. However, the April level was an improvement over the 5.03% NPL ratio in April last year.
The ratio of real and other properties acquired (ROPA) or foreclosed assets to total bank assets reached 2.78% in April from last month’s 2.74%.
"The increase in the ratio from last month took place as the 0.02%% hike in ROPA to P140.46 billion was accompanied by the [1.29%] decline in gross assets," the BSP statement read.
Non-performing assets to gross assets went up to 4.51% from last month’s 4.49%.
The increase came as the 0.77% drop in non-performing assets to P227.23 billion was outweighed by the 1.3% fall in gross assets.
The ratio of restructured loans to total loans also climbed to 2.08% from last month’s 2.03%, as the 1.54% drop in restructured loans to P49.97 billion was outpaced by a larger contraction in loans.
On a brighter note, the BSP reported that coverage or ability to absorb potential losses from bad loans improved to 99.65% from last month’s 99.30% and 94.74% last year. However, this came with a narrowing of coverage for non performing assets to 48.85% from 49.11% in March and 47.38% in April of last year, as non-performing asset reserves declined 1.3% to P111 billion.