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Bangko Sentral ng Pilipinas : TBs, RBs and Coop Banks Loan Quality Improves in Q2

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11/21/2013 | 11:04am CEST

11.21.2013

The combined non-performing loans (NPLs) of thrift, rural and cooperative banks represented 7.32 percent of their total loan portfolio (TLP) of Php 597.57 billion at the end of second quarter this year. 

The gross NPL slightly improved from the 7.77 percent in March 2013 as the banks' NPLs declined by less than one percent amid a five percent quarter-on-quarter rise in TLP. 

The banks' loan loss reserves (LLR) for the soured loans, meanwhile, stood at 68.26 percent of NPLs in end-June from the 66.52 percent figure posted in March 2013. Provisioning for NPLs is a prudential measure for mitigating potential credit losses.

Thrift, rural and cooperative bank loans represented 10.76 percent, 2.74 percent and 0.22 percent, respectively, of the Philippine banking system's TLP amounting to Php 4.36 trillion in June this year.

Thrift banks' (TBs) posted a 5.94 percent gross NPL ratio in June, lower than the 6.13 percent registered in March this year. The drop in gross NPL ratio was matched by a rise in TBs' LLR, which grew to 72.28 in June from 70.43 percent last quarter.

Rural banks' (RBs) gross NPL ratio, meanwhile, stood at 12.36 percent in June, higher than the 11.83 percent posted a year ago. RBs' LLR for soured loans, however, decreased to 59.65 percent in June from 61.54 percent three months ago.

Cooperative banks' gross NPL ratio dropped to 12.38 in June from 28.46 percent in March this year, while their loan loss provisioning increased to 81.26 percent of NPLs from 55.63 percent during the same period.

The monitoring of banks' loan quality is part of measures to ensure that financial intermediaries continue to adhere to high credit standards. This is essential to maintaining financial stability, which is a primary objective of the Bangko Sentral ng Pilipinas.


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