Banks’ bad loans averaged 2.55% in Sept.

The bad loans of universal and commercial banks came in below 3 percent for the eighth month in a row, reaching 2.55 percent of their total loan portfolio in September.

The figure was 0.03 point higher than the level seen in August.

The Bangko Sentral ng Pilipinas said the banks’ nonperforming loan (NPL) ratio also improved by half a point from the 3.31 percent reported in September 2010.

The central bank observed that the expansion in total loans outpaced the growth in NPLs, which accounted for the rise reported from August to September.

NPLs barely increased, reaching P76.99 billion in September, or 0.03 percent higher than P76.96 billion in August.

At the same time, the total loan portfolio reached P3.02 trillion—up 1.14 percent from P3.06 trillion.

Taking out loans between banks, the NPL ratio also increased by 0.03 percentage point to 2.71 percent in September from 2.68 percent in the previous month. This, however, meant an improvement of 0.75 percentage point from 3.46 percent from a year ago.

The BSP attributed the month-on-month increase to the rise in NPLs, as well as the 0.99-percent decline in regular loans, which settled at P2.84 trillion from P2.87 trillion.

Moreover, the ratio of restructured loans to total loans remained at the August level of 1.34 percent, but lower by 0.3 percentage point from the 1.64 percent in the same month last year.

The 0.57-percent increase in gross restructured loans was offset by the contraction in the total loans portfolio.

The ratio of real and other properties acquired (ROPA) to gross assets improved to 1.81 percent from 1.82 percent in August. It was also 2.21 percent better than the year-ago level.

The sequential improvement was due to the reduction of ROPA, which outpaced the decline in gross assets.

Moreover, the ratio of nonperforming assets (NPAs) to gross assets decreased to 3.02 percent from 3.03 percent in the previous month and from 3.65 percent over the year.

The improvement was observed as the reduction in NPAs outpaced that of gross assets.

Further, the BSP found that banks provided enough provisioning against potential credit losses, with the coverage strengthening to 122.5 percent of bad loans from 121.5 percent in August.