from sweet to sour

Banks’ soured loans jump in September
by BWorld/11.26.08

COMMERCIAL and universal banks’ soured debts as proportion of total loans rose slightly in September, the central bank said, although they stayed below the level posted a year ago.

Data from the Bangko Sentral ng Pilipinas (BSP) showed the NPL ratio rising to 4.04% that month, up from 3.9% in August, but lower than the 5.19% posted in the same month a year ago.

This snapped an improving trend that saw the NPL ratio dipping below the pre-Asian financial crisis level of 4%.

The BSP attributed the rise to the 2.54% hike in NPLs to P94 billion from P91.67 billion a month ago, coupled with a 0.96% decline in banks’ total loans to P2.33 trillion from P2.35 trillion.

"The decline in loans stemmed from lower interbank loans and reverse repurchase transactions during the month," the BSP said in a statement.

Loans are considered non-performing when left unsettled 90 days after the agreed upon maturity date.

Excluding banks’ lending to one another, the NPL ratio also rose to 4.56% from the previous month’s 4.49%, but this was lower compared to 6.31% last year.

The rise in the NPL ratio was due to the faster rise in dud loans compared to the 0.86% expansion in regular loans to P2.06 trillion from P2.04 trillion in August. — Gerard S. dela Peña