The asset quality of rural and cooperative banks in the country continued to improve in the third quarter last year, as indicated by the low incidence of bad loans during the period.
The Bangko Sentral ng Pilipinas (BSP) said on Monday the rural and cooperative banks’ nonperforming loans (NPLs) ratio declined from 12.93 percent in the same quarter in 2013 to only 12.24 percent at end-September 2014. This was also lower than the 13.45 percent reported in the second quarter.
This developed independent of higher and faster lending activities among the larger commercial banks during the period.
As absolute terms, the banks’ NPL ratio eased to P16.48 billion at end-September 2014, down from the P17.89 billion at end-June 2014. This was, however, slightly higher than NPLs of P16.4 billion at end-September 2013.
NPLs are also known as “bad” or “soured” loans, as these are outstanding loans more than 90 days past due.
“The latest NPL figures indicate the banks’ continued efforts to adhere to sound credit risk-management systems and to maintain high loan quality. These are essential to sustaining the viability of individual banks and to maintaining the overall stability of the domestic financial system,” the BSP said.
The entire lending portfolio of rural and cooperative banks, meanwhile, also represented a 1.3-percent rise from P132.89 billion at end-June 2014 to P134.61 billion the following quarter.
These are significantly higher than total loans extended by rural and cooperative banks at end-September 2013, totaling P126.78 billion. Such loans at end-September 2014 equaled 2.49 percent of the banking system’s portfolio forthe period.
The top borrowers across the economic sectors were agriculture, hunting, forestry and fishing; wholesale and retail trade; loans to individuals for consumption purposes; and real estate, renting and business activities.