MANILA, Philippines?The exposure of rural banks to delinquent loans fell into the single-digit territory in March from a year ago.

The Bangko Sentral ng Pilipinas said this was because most rural banks had decided to restructure their bad debts while enhancing their credit standards.

On the other hand, thrift banks? exposure to soured loans slightly grew during the same period as they extended more loans to the public.

The BSP on Friday reported that the average non-performing loans (NPL) ratio of rural banks settled at 9.43 percent as of end-March, down from 10.84 percent in the same period last year.

The BSP earlier had directed rural banks to reduce their NPL ratios, explaining that their exposure to bad debts had been above 10 percent in the past few years.

An indicator of banks? financial health, NPL ratio is the percentage share of soured loans to total credit a bank has extended. A loan is considered to be sour if it remains unpaid 30 days or more after maturity.

The BSP considers a single-digit NPL ratio to be comfortable, although it still wants smaller banks to further improve their NPL ratios to below 4 or 5 percent?a level enjoyed by most commercial and universal banks.

According to the central bank, bad debts carried by rural banks dropped to P9.36 billion from P10.12 billion as of end-March last year. On the other hand, their latest total loan portfolio increased to P99.35 billion from P93.39 billion.

The BSP said some rural banks agreed to restructure payment terms for some of the loans they extended to help bring down their NPL ratios. Others, meanwhile, foreclosed assets of delinquent clients.

The central bank also reported that NPL ratio of thrift banks increased to 7.85 percent from 7.75 percent as of end-March last year. Total loan portfolio of thrift banks grew by 6.6 percent?from P300 billion to P320 billion.