THE thrift banking industry’s bad loans ratio continued to improve in the first half of 2011 as their total loan portfolio grew faster than their non-performing loans, the Bangko Sentral ng Pilipinas (BSP) said.

In a statement, the BSP said that the bad loans ratio of thrift banks as of end-June last year improved to 6.18 percent from 7.93 percent in the same period in 2010.

Quarter-on-quarter, the industry’s NPL ratio improved by 0.38 percentage points from 6.56 percent.

The central bank attributed the improvement in the industry’s NPL ratio to the 4.56 percent expansion in total loan portfolio to reach P367.87 billion coupled with 1.37 percent contraction in bad loans ratio to P22.75 billion.

Exclusive of interbank loans, NPL ratio also eased to 6.33 percent from 8.19 percent in the same period in 2010.

“The industry resorted to restructuring and foreclosure proceedings to lessen the holdings of delinquent loans,” the BSP said.

The proportion of restructured loans to total loan portfolio rose to 1.19 percent from last quarter’s 1.16 percent as restructured loans grew by 7.74 percent to P4.43 billion from 4.12 billion last quarter.

Real and other properties acquired to gross assets went down to 3.60 percent in the first half of 2011 compared to 4.41 percent in the previous year.

The non-performing assets coverage ratio fell to 37.74 percent from 38.56 percent last quarter or still better than year ago’s 31.91 percent as NPA reserves contracted by 1.85 percent to P16.55 billion.

The bad loans ratio of rural banking industry, however, rose to 10.42 percent from 9.42 percent in the same period in 2010.

The BSP attributed the uptick in NPL ratio to the 2.91 percent rise in bad loans ratio to P11.23 billion, outpacing the 2.64 percent expansion in total loan portfolio to P107.81 billion.

Gross ROPA inched up by 2.77 percent to P8.41 billion from P8.19 billion in the first quarter.

The higher levels of delinquent loans and ROPA has brought the non-performing assets to reach P19.65 billion, which pushed the NPA ratio to 11.25 percent from 10.55 percent in the same period last year.

The additional provisioning provided by the industry to cover for the higher level of NPLs also fell short as the NPL coverage ratio narrowed to 48.25 percent.

The BSP maintained that the Philippine banking system is sound and stable as shown by growing resource base and the over 15 percent capital adequacy ratio which is above the BSP’s and the Bank for International Settlement’s minimum requirements.