Thrift banks report rising soured loans

Aggressive lending to the real estate sector led to an increase in bad loans held by thrift banks at the end of last year, data released by the central bank Wednesday showed.

The Bangko Sentral ng Pilipinas (BSP), the financial sector’s main regulator, was quick to downplay the risk, saying the thrift bank industry accounted for just 10 percent of all loans in the country’s banking system.

In a statement, the BSP said non-performing loans (NPL) held by thrift banks reached 5.34 percent of the sector’s total loan portfolio at the end of 2012, higher than the 4.97 percent posted as of the end of the first semester of the same year.

The industry’s coverage for possible losses also slipped to 64.59 percent of total NPLs in December from 71.55 percent in the previous semester. The BSP said while coverage was lower semester-on-semester, it was still better than the 58.97 percent in December of 2011.

“This indicates that the industry’s credit risk remains well-contained amid the current low-interest rate market environment and growing domestic economy,” the BSP said.

“The expansion in the NPL (in) real estate, wholesale and retail trade loans of most thrift banks triggered the build-up in the industry’s NPL,” the BSP said.

The BSP remained optimistic, saying the end-December NPL was still better than the 5.72 percent recorded in December of 2011.

In contrast, the NPL ratio for universal and commercial banks, which make up bulk of the banking industry, stood at just 1.87 percent at the end of December 2012. This record-low ratio was kept steady as of last May, BSP data showed.

Consumer loans accounted for the bulk of the total amount extended by thrift banks as of the end of 2012.

The BSP also pointed out that loans extended by thrift banks, at P446.56 billion, was just 10.65 percent of the entire banking industry’s portfolio.

The central bank said it would continue to monitor the quality of loans held by banks to see if certain adjustments in regulations were warranted.