The Current State of the Philippine Rural and Cooperative Banking System

This post is an attempt to estimate the current financial health of the Rural and Cooperative Banking System.  Although the BSP does not publish the Statements of Condition of each rural and cooperative bank, they do give out consolidated statistics on www.bsp.gov.ph.  The latest statistics are as of March 31, 2011.

On an overall basis, rural and cooperative banks are relatively healthy.  However, the ratio of their distressed assets to their capital cushion remains elevated at 78.22% as of March 31, 2011.  The ratio for rural banks, in particular,  is slightly lower at 74.87%.  Cooperative banks, on the other hand, are in the danger zone (ratio > 100%), with a ratio of 119.90% as of March 31, 2011.  Fortunately, they only have  a miniscule PHP 3.428 billion in distressed assets and do not pose any systemic risk to the Philippine banking system.

Philippine Rural and Cooperative Banking System
Total Distressed Assets/ Total Capital Cushion
March 31, 2011
		March 31, 2011
	Total Distressed Assets (In PHP Million)	Total Capital Cushion (In PHP Million)	Distressed Assets/ Total Capital Cushion (In %)
Rural Banks	26,631	35,568	74.87%
Cooperative Banks	3,428	2,859	119.90%
Total	30,059	38,427	78.22%