Thrift banks’ soured loans increase

Non-performing loans (NPL) held by the thrift banks rose to P33.355 billion for the month, increasing by 20.02% from the P27.779 billion recorded in February 2015 and the P33.104 billion seen in January.

NPLs are loans left unpaid for at least 30 days past their due date, with the NPL ratio taken as one of the measures used by the BSP in monitoring the asset quality of banks.

The jump in bad loans outpaced the 18.98% rise in total credit handed out by thrift banks that month at P719.535 billion, coming from P604.76 billion previously. As a result, the share of NPLs to total loans climbed to 4.64% from 4.59%.

The thrift banks' coverage for bad debts also slipped to 72.01%, coming from 72.67% in February 2015.

Non-performing assets held by banks -- which include foreclosed properties and other seized items of value -- stood at P55.397 billion in February, 15.7% higher than the P47.87 billion tallied a year ago.

The banks hiked their allowance for potential loan defaults to P17.313 billion in February from P14.888 billion previously. Against total loans, loan loss reserves stood steady at 3.34%.

There were 65 thrift banks operating in the Philippines as of end-2015, based on BSP data.

At end-December, soured debts held by thrift banks went up to a revised P31.399 billion, up by more than a fifth from the year-ago level of P25.373 billion, which brought the NPL ratio to 4.53%. The lenders booked a cumulative P11.786 billion in net income that year, up by 14.6% from 2014's P10.287 billion.

Source: Bworld Online