MANILA, PHILIPPINES - Non-performing loans on the books of the Philippines' largest banks improved to 3.88 percent of their total assets in August, the central bank said Tuesday.

The ratio for universal and commercial banks was an improvement over the previous month's 3.98 percent and the ratio a year earlier of 5.28 percent, a central bank statement said.

Universal and commercial banks, which are allowed to engage in other financial services such as investment banking, now have bad loans totalling 91.53 billion pesos (1.9 billion dollars) compared to their total loan portfolio of 2.36 trillion pesos.

"The industry sustained an improving trend for the past six months and kept the NPL ratio below four percent for the past three months," it added.

The 1.07 percent month-on-month improvement was complemented by a 1.45 percent expansion in the total loan portfolio of universal and commercial banks.