RP banks' bad loans fall further in July
Reuters
First Posted 15:09:00 10/06/2008
Filed Under: Economy, Business & Finance
MANILA, Philippines -- Local commercial banks' non-performing loans (NPLs) in July slipped for a fifth month in a row to 3.98 percent of total loans, the lowest since the 1997/98 Asian financial crisis, the central bank said Monday.
Total loans contracted 1.2 percent to P2.33 trillion ($49 billion) at the end of July from June, but this was outweighed by a 1.55-percent decline in non-performing loans to P92.53 billion in the same period, it said.
The central bank said total loans contracted because of lower interbank loans and reverse repurchase transactions during the month.
Non-performing assets, which are bad loans and real estate foreclosed by banks, made up 5.15 percent of banks' gross assets at the end of July, up from 5.0 percent the previous month but better than 5.63 percent a year earlier.
Philippine banks' bad loan ratio improved significantly after the government passed a law that granted incentives such as tax perks to buyers of banks' soured assets.
Bad loans peaked at 18.8 percent in October 2001, in the aftermath of the regional financial crisis, following defaults by corporate borrowers.
Philippine commercial banks' exposure to real estate via loans and investments in debt issues of property firms climbed 5.2 percent to P213.2 billion at the end of June from the end of the first quarter and was up 11.4 percent from a year earlier, the central bank said in a separate statement.
Non-performing real estate loans climbed 2.7 percent to P15.1 billion at the end of June from end-March.
But the ratio of non-performing real estate loans to total property loans slid to 7.3 percent in the period from 7.6 percent in the previous quarter.
($1 = P47.40)
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