bangko sentral at 15. 7 %. the business of rural banking has also continued to show viability and profitability. net income after tax ( niat ) increased by 20 % from php 2. 3 billion in 2006 to php 2. 8 billion in 2007. return on assets and equity also continue to increase. savings mobilization and lending activities have also been on an uptrend. deposit liabilities in 2007 were at php 108. 1 billion, a 21. 5 % increase from the previous year. similar double digit increases were seen in the sector ’ s lending activities. total loan portfolio of rural banks increased to php 93. 3 billion from only php 77. 1 billion in 2006. while lending activities expanded, the high quality of the portfolio was maintained. as of the 4th quarter of 2007, the non performing loans ( npl ) ratio was 9. 67 % which is an improvement from the 11. 11 % for the same period for the previous year. using these indicators, rural banks are faring equally or even better than its universal, commercial and thrift bank counterparts while remaining true to its core mission of serving the needs of the countryside. rural banks alone cover around 80 % of the total municipalities in the philippines with nearly 730 banks and over 2, 000 branches nationwide. the real value added of rural banks, however, does not lie solely on their broad geographical presence but just as importantly on their deep understanding of the character, peculiarities and needs of the rural customers. at the bangko sentral, we have no doubt that rural banks are the ideal partners in invigorating local economies. toward this end, we are working assiduously to ascertain that abundant opportunities are available for rural banks to ensure their institutional viability, expand their businesses and more importantly improve their products and services. the issuance of the revised branching guidelines last december 2005 ( circular 505 ) aimed to enhance competition in the banking system and maximize the delivery of financial services especially in underserved areas. the new guidelines enable existing banks to further increase the depth and breadth of their outreach and better serve more and more clients both in the rural and urban areas. the benefits of such policy to the rural banking sector are immediately evident. as of end 2007, number of rural and cooperative bank offices increased to 2, 133 offices from 2, 075 in the previous year. while the number of banks decreased by 12, the number of branches and other offices increased by 58 from end 2006 to end

professorial chair in government and official statistics at the up school of statistics, manifests the satisfaction of the bangko sentral ng pilipinas in the contribution of the chair holders. therefore, when up president roman and dean echanis approached the bsp for upgrading the old cbp / bsp chairs to up centennial professorial chairs, they found ready support within the monetary board. in awarding the chairs, the bsp affirms the academic excellence and freedom that makes the university of the philippines what it is today. the professorial chairs provide funding support for research but the chair holders are free to set the research agenda within the sphere covered by the professorial chairs. on the whole, the gains to the up exceed the obvious opportunity to retain and upgrade its most important resource, its faculty. it provides a chance to generate research and facilitate extension activities among the major units of the up system. for its part, the bsp benefits through improvements in the existing body of policy - oriented social science research, of which it is both a producer and user. our partnership with the university will allow us to further avail of intellectual assets to generate ideas, evolve good practices, access good vetting and generate competitive advantage in a difficult policy environment. i must say that the establishment of the bsp up centennial professorial chairs is also in recognition of the role of the university of the philippines as the alma mater of the many professionals among its staff. through these offerings, we hope to continue to provide up ’ s community of academics and scholars the opportunity to generate ideas and applications that uphold the long - standing up tradition of academic rigor, intellectual freedom, and practical relevance. more importantly, we hope that the research generated through the professorial chairs will be of benefit to policymakers at the bsp and in government who are engaged in the quest for socioeconomic development, one that will truly meet the development aspirations of filipino society. the bsp up centennial professorial chairs also serve as a challenge for up ’ s community of academics to continue to serve as catalysts for meaningful change in our society. once again, the bangko sentral celebrates with you the first 100 years of the university of the philippines and look forward to the next one hundred years of excellence in research and education at up. maraming salamat at magandang hapon sa inyong lahat!