also well above industry and regulatory standards. your total loan portfolio is nearly half a billion which accounts to 65. 5 percent of your total assets. your lending activities have surely provided farmers and other entrepreneurial rural folks with wider latitude in accessing credit which translated to better lives for the rural community. with your wide array of deposit products and credit lending programs, you managed to sustain bottom line figures at very good levels. rang - ay ’ s performance definitely did not go unnoticed as evidenced by the various accolades from financial and non - financial organizations 2, the bangko sentral included. as such, one can say that rang - ay is poised to further improve its level of efficiency to ensure continuous market leadership during these challenging but equally rewarding times. to date, the rang - ay bank has 1 head office, 9 bank branches and 1 affiliate bank ( rural bank of burgos, which will be consolidated with rang - ay, inc. following the grant of the certificate of authority to operate by the bsp rang - ay received 1 award from the bsp, 7 awards from other banks, 1 award from rural credit and guarantee corporation and 3 awards from a private non - government organization ( ngo ). industry outlook let me therefore take the next few minutes to outline the banking industry prospects in 2006 to help you firm up your strategic plans for this year and beyond. we are optimistic that the rural banking industry will sustain its positive performance this year and remain in the forefront of reforms as catalysts of a broad - based development in the countryside. for our part at the regulatory front, the bsp remains committed to the continuous implementation of our reform program to sustain financial stability and growth. specifically, our objective is to have a more stable, more efficient and a more depositor and friendly banking system. we are still advocating clean up of banks ’ balance sheets through the expedient and innovative disposition of non - performing assets. this is central to restoring the credit supply to the productive sectors of the economy. our goal is to bring the banking industry ’ s npa / npl ratio to single - digit level. as of end - june 2005, the rural banking industry ’ s npa / npl ratios stood at 11. 9 and 14. 7 percent, respectively. this is still double the pre - crisis period since the sale of npas under the spv law only created a small dent on the inventory of acquired assets arising from soured loans. we, thus, welcome

the domestic economy. for this reason, they can have a positive impact on the external accounts, contribute to liquidity expansion and help lower domestic interest rates. however, policymakers will also need to be prepared to face the possibility of exchange rate appreciation and increased liquidity growth, along with associated concerns. the key challenge is to conduct monetary policy so as to ensure that the additional resources provided by rising foreign capital inflows do not lead to inflationary pressures or to asset price bubbles. as economic conditions improve and we enter another phase of the business cycle, policy imperatives come into the fore. the challenge is to address the inherent procyclicality of the financial system by strengthening the macro - prudential framework for monetary policy. the long - term commitment to price and financial stability imposes the need to require better risk management within the financial system. on its part, the bsp has already issued its internal capital adequacy assessment process ( icaap ) guidelines which aim to strengthen the risk culture within banks. likewise, the bsp is in the process of beefing up its macro - surveillance capabilities. mindful of the lessons brought by the global financial turmoil, the bsp has stressed the need to operationalize the guidelines on liquidity risk management. moreover, the bsp will continue to monitor proposed further enhancements * and adjustments in the basel ii framework to make capital requirements countercyclical. another challenge is to sharpen the central bank ’ s communication toolbox to include not only management of expectations but also management of risk aversion. the key point is to maintain and enhance the credibility of the monetary and financial policies such that expectations are well - anchored and concerns of risk aversion do not become self - fulfilling. finally, i want to conclude my presentation by emphasizing that : • the full recovery of the global financial system may take some time ; • with the global economy likely to be going at a sub - par rate for some time, the key challenge is to continue to provide support domestic demand. as monetary policy has eased, fiscal policy will also play a key role in sustaining domestic economic activity. • the bsp will continue to calibrate its actions appropriately to help achieve faster recovery of the domestic economy always taking into consideration the inflation outlook. - - - - - - - - - - - - - - - - moody ’ s investors service upgraded the philippines ’ foreign and local currency government ratings to ba3 from b1, the country ceiling