Thrift banks’ bad loans rise in March
Despite a decline in core lending from the previous quarter, latest data from the Bangko Sentral ng Pilipinas (BSP) said that the country’s thrift banks posted a slightly higher level of bad loans in March.
BSP said that as of March, thrift banks posted an average non-performing loan (NPL) ratio of 7.85 percent, up from 7.27 percent in the fourth quarter of 2009 and 7.75 percent a year ago.
Of the total P320.9 billion loans extended by thrift banks as of March, about P25.189 billion were past due accounts, BSP said.
Bad loans refer to past due accounts whose principal and interest remain unpaid after 30 days.
The central bank said the increase in thrift banks’ NPL ratio stemmed from the 7.66 percent increase in delinquent loans and the 0.26 percent contraction in total loan portfolio from the December figure.
"Nevertheless, the industry was able to maintain a single-digit NPL ratio for the past 20 quarters," BSP said.
Meanwhile, BSP also said that rural banks posted an NPL ratio of 9.43 percent in the first quarter, representing an improvement from 10.41 percent in the fourth quarter of 2009 and 10.84 percent a year ago.
Data showed that rural banks’ delinquent loans fell 7.81 percent quarter-on-quarter to P9.36 billion as of March while their total loans rose 1.86 percent to P99.35 billion.
"However, the decline in delinquent loans was followed by increased restructuring and foreclosure proceedings as both restructured loans and real and other properties acquired (ROPA) simultaneously rose during the quarter," BSP said.
Also, cooperative banks saw their NPL ratio improve to 7.06 percent in the first quarter of 2010 from 7.87 percent in the fourth quarter of 2009 and 8.82 percent a year earlier.
The central bank linked the quarter-on-quarter improvement in NPL ratio of cooperative banks to the 9.73 percent decline in delinquent loans to P770 million and the 0.66 percent rise in their total loans to P10.97 billion as of March.
As of December 2009, there were 73 thrift banks with 1,260 branches and 674 rural and cooperative banks with 2,093 branches nationwide.
Monetary authoritiesbelieve that the NPL ratio of banks will keep improving as the gross domestic product (GDP) grew stronger in the first half of the year, possibly translating to better corporate earnings and lower interest rates.
Stronger domestic output, BSP officials explained, would help corporate and individual borrowers settle their financial obligations on time. - Jimmy Calapati