Monday, July 25, 2011

Banks’ NPL ratio fall to historic low of 2.8%

Soured loans down to P81.91B as of end-May
By:

8:50 pm | Sunday, July 24th, 2011

The Exposure of the country’s universal and commercial banks to bad debts fell to a historic low in May, a development that highlighted the significant progress of the banking sector since the Asian financial crisis of the late 1990s.

The Bangko Sentral ng Pilipinas reported Friday that the average nonperforming loans (NPL) ratio of universal and commercial banks settled at only 2.8 percent as of end-May, matching the record low registered in December 1996 before the Asian financial crisis struck in 1997.

The latest NPL ratio was better than the 2.95 percent as of April this year and the 3.31 percent as of May last year.

The nonperforming loan ratio is the proportion of bad debts to the outstanding loans of banks. A loan becomes a bad debt if it remains unpaid at least 30 days after maturity.

The BSP said the decline in the NPL ratio in May was a favorable development because it did not come with reduced appetite for lending. It said the NPL ratio fell both because of the drop in the bad debts and the expansion of the outstanding loans.

The latest NPL ratio was a result of the P81.91 billion in bad debts and the P2.93 trillion in outstanding loans. The latest amount of bad debts was down 1.83 percent from P83.44 billion as of end-May last year. On the other hand, the latest outstanding loans were up 3.48 percent year on year from P2.83 trillion.

The BSP also said the decline in the NPL ratio also came without having to engage in higher amounts of debt restructuring for borrowers. It said the ratio of restructured loans to the total loan portfolio of banks dropped to 1.39 percent as of end-May from 1.63 percent a year ago.

Saturday, July 23, 2011

Philippines leads in income inequality in Asean, says study

By:


The gap between the rich and the poor is most pronounced in the Philippines as compared with neighboring Southeast Asian nations, a new study by research and advisory firm Stratbase Research Institute showed.

The study noted that the Philippines registered a Gini coefficient of 44 percent last year, higher than Thailand’s 42.5 percent, Indonesia’s 39.4 percent, Malaysia’s 37.9 percent and Vietnam’s 37.8 percent.

The global ranking was prepared by international group Vision of Humanity using the Gini coefficient, a measure of the inequality of a distribution, as the basis.

“Relatively, the Philippines had the highest Gini coefficient among these countries, which means a greater rate of inequality compared to other Southeast Asian countries,” explained Stratbase president Victor Andres Manhit.

He said this should be addressed as the huge disparity between the rich and the poor bred “social tension and even political instability.”

“Inequality and tragic marginalization can worsen without the proper policies in place. For Stratbase, therefore, the elected leadership must firmly hold the line against vested interests and political machinery that are poised to advance their position to the grave detriment of the majority,” he said.

The country’s high Gini coefficient was backed by similar research by multilateral lenders Asian Development Bank and the World Bank, as well as the United Nations Development Program, National Statistics Office and National Statistical Coordination Board on spending and income in the country.

Huge disparity

A World Bank report showed that the richest 20 percent of the population “outspent” the poorest 20 percent by more than eight times.

“This huge disparity in expenditures can cause problems such as the lack of legitimacy, the weakening of social cohesion and the outbreak of social strife. [It can] exacerbate the existing differences and conflict between the poor and the non-poor,” the World Bank report stated.

If left unchecked, Stratbase said this wide chasm could cause “the polarization of society and the creation of social tensions that eventually undermine the process of growth and development.”

An ADB study, on the other hand, showed vast inequalities, not only in income, but also in land distribution, welfare and human development.

The same study showed that the richest 10 percent of Filipino families were “raking in more than a third of the country’s total income.”