Rural, cooperative banks incur higher 2012 NPL ratios on typhoons — Bangko Sentral

The bad or non-performing loans (NPL) of rural and cooperative banks accounted for 11.57 percent of the sector's P127.47-billion loan portfolio as of end-2012, a ratio higher than the 10.14 percent a year earlier, Bangko Sentral ng Pilipinas said Tuesday.

 

In terms of sectoral NPL ratio, rural banks alone registered at 10.65 percent  from 10.32 percent in the same comparable period, with a loan loss reserves for bad loans of 59.47 percent from 50.98 percent.

 

Cooperative banks, however, posted a 19.84 percent NPL ratio as of end-December 2012 or an increase of over 100 percent from 9.49 percent as if end-June 2012.

 

The higher NPL ratio was incurred by rural and cooperative banks as clients were unable to service their respective debts on account of Typhoons Gener, Habagat and Helen which barreled through the country last year, according to Bangko Sentral.

 

Despite the higher ratio of bad loans to the total, Bangko Sentral noted the “banks' reserves for NPLs rose significantly to 61.74 percent as of the end of last year from 53.26 percent in June 2012" which indicated a higher sense of prudence against credit losses. 

 

A loan in default or close to being one is considered an NPL and, depending on the contract terms, become a full-blown NPL after the payment terms have not been honored by the borrower for 90 days.

 

Bangko Sentral noted the loan portfolio of  rural and cooperative banks account for 2.74 percent and 0.30 percent, respectively, of the industry's loans.

 

As of end-December 2012, the whole banking system which include commercial and universal banks was responsible for P4.228 trillion worth of loans—up 12.4percent higher from P3.762 trillion a year earlier, central bank data showed. — VS, GMA News