Banks’ bad loans dipped further in April

The banking industry’s bad debts remained below 3 percent of their total loan portfolio for the third month in a row, easing by 0.04 percentage point to 2.95 percent in April from the March level.

Data from the Bangko Sentral ng Pilipinas also showed that the non-performing loans (NPL) ratio went down by 0.39 percentage point from 3.34 percent in April 2009.

According to the BSP, the change over the previous month developed amid the expansion in total loans outpacing the growth in NPLs.

NPLs rose to P83.44 billion in April or by 1.25 percent from P82.41 billion in March.

At the same time, the total loan portfolio rose to P2.83 trillion or by 2.57 percent from P2.76 billion.

Taking out loans between banks, the NPL ratio was also whittled down to 3.16 percent in April from 3.21 percent in the previous month and 3.79 percent from a year ago.

The BSP attributed the decline to the rise of regular loans by 2.93 percent to P2.643 trillion.

Also, the ratio of restructured loans to total loans went down to 1.48 percent from 1.54 percent in March and 1.74 percent in the same month last year.

This was due to gross restructured loans falling by 1.45 percent or P42.21 billion.

The ratio of real and other properties acquired (ROPA) to gross assets remained at 1.98 percent compared to the March level, but improved from the year-ago level of 2.35 percent.

The improvement was due to the reduction of ROPA outpacing the decline in gross assets.

Moreover, the ratio of non-performing assets (NPAs) to gross assets went up to 3.35 percent from 3.32 percent in the previous month, but improved from 3.89 percent over the year.

The expansion was observed as NPAs increased while gross assets decreased.

Further, the BSP found that banks provided enough provisioning against potential credit losses, with the coverage strengthening to 126 percent of bad debts from 120.4 percent in March.

The low levels of bad loans as well as the bad loan ratio in the local banking industry is being aided, in part, by the low interest rate regime which has prevailed both locally and internationally since the the outbreak of the global financial crisis.

Of late, however, monetary authorities have begun raising interest rates gradually in an effort to combat inflationary pressures.