Thrift and cooperative banks managed to reduce their exposure to bad debts at the end of the first semester last year, thanks to their adherence to what regulators consider as prudent lending standards.
The nonperforming loans (NPL) ratio—the proportion of bad debts to total loan portfolio—of thrift banks averaged at 6.18 percent as of end-June 2011, better than the 7.93 percent registered as of the same period the previous year, data from the Bangko Sentral ng Pilipinas showed.
The drop in the NPL ratio came even as the thrift banks extended more loans over the period.
Regulators said observance of prudent lending standards allowed the banks to keep their exposure to bad debts within a comfortable level, even as they extended more credit to clients.
Total loan portfolio of thrift banks reached P367.87 billion by end-June last year, rising year-on-year by nearly 13 percent from P326.32 billion.
Their bad debts—which are loans that have remained unpaid at least 30 days after maturity—dropped by 12 percent over the same period to P22.75 billion from P25.89 billion.
The cooperative banking industry likewise cut its NPL ratio over the same period to 8.11 from 8.52 percent.
Outstanding loans extended by the cooperative banks rose by 9 percent to P11.9 billion from P10.88 billion, while their bad debts rose by only 4 percent to P965 million from P927 million.
The rural banking sector, on the other hand, was exposed to more bad debt.
NPL ratio of rural banks rose to 10.42 percent from 9.42 percent over the same period. Their total loan portfolio fell, while the level of bad debt rose.
Outstanding loans dropped by 8 percent to P107.81 billion from P100.22 billion.
On the other hand, bad debts rose by close to 19 percent to P11.23 billion from P9.44 billion.