Rural banks’ bad loans down in Sept.

The share of bad loans to the total loan portfolio of the country’s rural and cooperative banks improved to 11.53 percent as of end-September last year on the back of increased lending to productive sectors, the Bangko Sentral ng Pilipinas (BSP) said Tuesday.

In a statement, the BSP said the gross nonperforming loan (NPL) ratio of rural and cooperative banks went down from 11.9 percent as of  end-June last year as gross NPLs dropped while the total loan portfolio (TLP) expanded.

Rural and cooperative banks’ TLP inched up by 1.37 percent to P121.42 billion as of September, from P119.78 billion a quarter ago.

Three-fifths of their TLP were composed of loans to the following sectors: Agriculture, fishing and forestry; retail and wholesale trade, and individuals (consumers).

Their NPLs, meanwhile, slid 1.81 percent to P14 billion as of end-September last year from P14.25 billion in June.

The rural and cooperative bank industry also allocated loan loss reserves equal to 65.7 percent of its gross NPLs during the period, a higher buffer against potential credit losses than a quarter ago.

The NPL coverage ratio was a lower 62.51 percent as of end-June.

“The latest NPL figures indicate the banks’ continued efforts to adhere to sound credit risk management principles to maintain loan quality,” the BSP said. Ben O. de Vera