Small banks reported less bad loans in ’13

An increase in lending activities slightly improved the gross non-performing loans (NPLs) ratio of the country’s cooperative, rural and thrift banks at end-2013, the Bangko Sentral ng Pilipinas (BSP) reported on Friday.

In a statement, the BSP said that the combined gross NPLs of thrift, rural and cooperative banks last year comprised 7.04 percent of their total loan portfolio worth P639.99 billion.

The yearend gross NPL ratio was an improvement from the higher 7.33 percent posted at the end of the third quarter of 2013, indicating “an overall improvement in the banks’ loan quality,” the BSP noted.

“Aside from keeping the NPL ratio low, the banks also set aside substantial reserves for potential credit losses,” the BSP pointed out, citing that the banks’ loan loss reserves at end-2013 stood at 67.58 percent of their gross NPLs, up by more than a percentage point from 66.10 percent at end-September.

The gross NPL ratio of thrift banks at end-2013 was 5.46 percent while loan loss reserves hit 72.51 percent. As for cooperative and rural banks, the gross NPL ratio was 13.13 percent while loan loss reserves stood at 59.68 percent at the end of last year.

In all, the total loan portfolio of cooperative, rural and thrift banks in 2013 was higher by 3.64 percent from P617.49 billion as of end-September last year.

The combined loans of thrift, rural and cooperative banks accounted for 13.07 percent of the Philippine banking system’s P4.90-trillion worth in 2013. Ben O. de Vera