November 26, 2008
The accumulated bad loans of universal and commercial banks edged up to 4.04 percent of their total loan portfolio in September compared with only 3.9 percent in August.
The banking sector was expected to hit some difficult times as the country plowed deeper into the global financial crisis and the resulting widespread recession in the major trading economies around the world.
The Bangko Sentral ng Pilipinas (BSP) reported yesterday that although the September non-performing loans (NPL) ratio was better than last year’s 5.19 percent, the bad loans of universal and commercial banks or U/KBs went up by 2.55 percent in September.
Total NPLs of U/KBs, according to the BSP, now stood at P94 billion compared with P91.67 billion in August.
The BSP said earlier that it saw no evidence that Philippine banks were hitting the same credit freeze in Europe and the US but based on the September NPL data, bank lending had softened slightly from P2.35 trillion in August to P2.32 trillion in September.
“The decline in loans stemmed from lower interbank loans and reverse repurchase transactions during the month,” the BSP reported.
Even excluding interbank lending, the BSP reported that the NPL ratio still rose to 4.56 percent from 4.49 percent in the previous month because the growth in bad loans outpaced the growth in regular loans from P2.043 trillion to P2.061 trillion.
In the meantime, the BSP said real and other properties acquired (ROPA) by U/KBs dropped 1.97 percent to P142.39 billion, from P145.25 billion in August.
The BSP said this brought down the level of non-performing assets (NPA) to P236.39 billion (down by 0.22 percent from August). As a result, the NPA to gross assets (GA) ratio of the industry eased to 4.89 percent from the previous month’s 4.95-percent ratio.
The restructured loans (RLs) to TLP ratio went down to 2.47 percent from the previous month’s 2.51 percent and year ago’s 3.44-percent ratios. The month-on-month drop in the ratio was fueled by the 2.32-percent decline in gross RLs to P57.96 billion.
In terms of provisioning for bad loans, the BSP said the industry’s NPL coverage ratio (LLRs to NPLs) slid to 94.91 percent from August’s 98.68 percent.
Similarly, the NPA coverage ratio (NPA reserves to NPAs) narrowed to 48.65 percent from 49.04 percent. But the central bank said the September NPL and NPA coverage were substantially better than year-ago ratios of 88.69 percent and 42.51 percent, respectively.
Bank regulators are expecting tighter credit conditions but BSP Governor Amando M. Tetangco Jr. said earlier that aside from significantly-improved balance sheets, Philippine banks had adequate capital to weather the crunch.
Large blue-chip banks have been relatively successful in raising capital but smaller banks with little access to the capital market could be shut out while the financial market is in turmoil.
According to Tetangco, the banking system remains capitalized at levels above both the standards of the BSP and the Bank for International Settlements.
“Because of our phased-in approach to the adoption of the Basel 2 capital framework, banks had sufficient time to shift their portfolios and raise capital,” Tetangco said.
“These have allowed banks to weather the challenges resulting from the global financial turmoil and relative tightening of credit standards,” he said.
News Source: http://www.philstar.com/Article.aspx?articleId=418599 |
