In a fairly recent article entitled "Stress Test Proves Strength of PH Banks", BSP Managing Director Johnny Noe Ravalo maintained that Philippine Commercial Banks could withstand "a 20%, 30%, or even a 50% loan write-off and still have the liquidity to survive. But the write-offs he was talking about were write-offs on non-performing loans (NPLs), which are at historic lows for Philippine Commercial Banks. (See"U/KBs' NPL Ratio at 2.23 Percent" and "The NPL Ratio of the Philippine Commercial Banking System is at Historic Lows").
For Philippine Commercial Banks, these NPLs currently comprise PhP 75.272 billion or 10.22% of the Stockholders Equity as of December 31, 2011. So, writing off 50% of the Philippine Commercial Banking NPLs would reduce their aggregate stockholders equity by a little more than 5%.
For Philippine Thrift Banks, the NPL levels are much higher on a relative basis. As of December 31, 2011, Philippine Thrift Bank NPLs amounted to PhP 23.300 billion or 31.69% of the PhP 73.521 billion of Stockholders Equity of the Philippine Thrift Banking System for the same period. This is three times the level of the Philippine Commercial Banking System. As a consequence, Philippine Thrift Banks, as a whole, are much more vulnerable to a 50% NPL write-off, simply because the NPL levels are so much higher than that of Philippine Commercial Banks.
In a 50% write-off of NPLs would reduce the Stockholders Equity of Philippine Thrift Banks by almost 16%. Naturally, some banks would be more affected than others. One bank, Real Bank (A Thrift Bank) Inc., would experience a complete wipe-out of their stockholders equity. Another, Citibank Savings Inc. would also experience a near wipe-out of its stockholders equity (75.60%). Citibank Savings Inc. is the local subsidiary of a foreign bank and, as such, has little or no capital. In a crisis, it would rely on its "home-host" arrangement wherein the mother ship (the foreign parent) sends more funds and/or capital when local regulators or counterparties require it. Two others, Metro Cebu Public Savings Bank and Legazpi Savings Bank Inc., would be severely affected (a 36.89% and 35.54% loss in stockholders equity, respectively).
| Philippine Thrift Banking System | |||
| NPL as % of Stockholders Equity | |||
| December 31, 2011 | |||
| NPL | SE | NPL/SE | |
| Bank | (In PHP) | (In PHP) | (In %) |
| Real Bank (A Thrift Bank) Inc. | 3,761,343,022.96 | 485,472,417.97 | 774.78% |
| Citibank Savings Inc. | 2,688,780,795.67 | 1,778,267,246.43 | 151.20% |
| Bataan Development Bank | 49,547,170.51 | 67,151,915.52 | 73.78% |
| Metro Cebu Public Savings Bank | 33,842,528.83 | 47,611,835.39 | 71.08% |
| Legazpi Savings Bank Inc. | 102,155,635.59 | 176,184,787.67 | 57.98% |
| Farmers Savings & Loan Bank | 55,157,424.76 | 96,695,493.71 | 57.04% |
| Premiere Development Bank | 393,266,678.29 | 716,643,346.57 | 54.88% |
| GSIS Family Bank | 217,867,697.74 | 409,541,141.62 | 53.20% |
| Sterling Bank of Asia Inc. | 761,557,701.00 | 1,558,763,397.01 | 48.86% |
| Planters Development Bank | 2,353,987,030.03 | 4,837,392,051.52 | 48.66% |
| Hiyas Savings & Loan Bank | 68,179,670.76 | 146,893,188.34 | 46.41% |
| Village SLA, Inc. | 31,931,894.94 | 70,179,868.87 | 45.50% |
| Opportunity Microfinance Bank | 53,153,241.19 | 125,795,356.74 | 42.25% |
| Equicom SB | 164,853,333.13 | 400,880,700.00 | 41.12% |
| Philippine Postal Savings Bank | 273,002,996.63 | 687,001,256.45 | 39.74% |
| Malasiqui Progressive SLB, Inc. | 17,265,442.43 | 47,561,616.09 | 36.30% |
| Penbank, Inc. | 76,715,445.49 | 228,034,536.79 | 33.64% |
| Northpoint Development Bank | 16,364,881.08 | 51,255,200.96 | 31.93% |
| Philippine Savings Bank | 4,248,590,693.36 | 14,584,140,004.01 | 29.13% |
| University Savings Bank | 55,528,391.03 | 196,550,939.52 | 28.25% |
| BPI Family Savings Bank | 3,921,923,095.70 | 13,922,916,376.18 | 28.17% |
| Pampanga Development Bank | 29,496,722.29 | 109,115,257.91 | 27.03% |
| Lemery Savings & Loan Bank, Inc. | 18,652,187.00 | 69,668,260.33 | 26.77% |
| First Consolidated Bank | 421,499,695.76 | 1,607,830,348.37 | 26.22% |
| World Partners Bank (A Thrift Bank) | 39,957,315.77 | 161,937,999.09 | 24.67% |
| Malayan Bank Savings & Mortgage Bank | 223,872,388.47 | 971,865,947.27 | 23.04% |
| Luzon Development Bank | 84,342,263.81 | 371,751,520.19 | 22.69% |
| Allied Savings Bank | 214,173,045.67 | 987,463,043.06 | 21.69% |
| Tong Yang Savings Bank Inc. | 82,586,107.99 | 397,467,814.16 | 20.78% |
| Iloilo City Development Bank | 12,338,437.45 | 60,940,836.24 | 20.25% |
| Philippine Business Bank | 680,760,722.79 | 3,582,378,540.51 | 19.00% |
| Producers Savings Bank | 121,753,296.44 | 662,238,871.79 | 18.39% |
| RCBC Savings Bank | 1,239,993,237.59 | 7,131,496,114.04 | 17.39% |
| Cordillera Savings Bank | 16,370,965.30 | 99,454,078.20 | 16.46% |
| Liberty Savings Bank | 9,732,755.30 | 60,076,497.74 | 16.20% |
| Maritime SLA | 10,512,842.67 | 66,378,323.17 | 15.84% |
| Pacific Ace Savings Bank | 11,084,070.76 | 70,123,577.71 | 15.81% |
| Business & Consumers Bank | 11,751,821.42 | 75,041,830.71 | 15.66% |
| Pridestar Development Bank | 9,865,126.75 | 66,779,165.00 | 14.77% |
| Wealth Bank - A Development Bank | 51,817,961.85 | 358,069,342.71 | 14.47% |
| Quezon Coconut Producers SLB Inc. | 8,010,201.39 | 56,672,170.22 | 14.13% |
| BPI Direct Savings Bank | 87,573,792.35 | 725,409,794.69 | 12.07% |
| UCPB Savings Bank | 185,362,577.92 | 2,003,164,192.90 | 9.25% |
| Dumaguete City Development Bank | 18,114,585.98 | 207,953,940.23 | 8.71% |
| Sampaguita SLA | 5,344,828.88 | 64,830,597.27 | 8.24% |
| Dungganon Bank | 4,689,862.96 | 61,366,684.12 | 7.64% |
| Sun Savings Bank | 5,479,669.65 | 74,007,397.84 | 7.40% |
| Card SME Bank Inc. (A Thrift Bank) | 8,633,315.66 | 135,000,938.65 | 6.40% |
| Optimum Development Bank | 38,214,718.52 | 641,273,816.64 | 5.96% |
| Microfinance Maximum SB (Maxbank) | 3,336,315.55 | 61,760,299.06 | 5.40% |
| China Bank Savings | 54,509,441.79 | 1,293,810,766.29 | 4.21% |
| Life Savings Bank | 2,638,855.79 | 63,657,969.31 | 4.15% |
| Tower Development Bank | 4,513,526.42 | 109,714,758.28 | 4.11% |
| City Savings Bank | 72,855,315.95 | 1,775,429,527.38 | 4.10% |
| HSBC Savings Bank (Phils) Inc. | 84,603,585.27 | 2,203,663,156.78 | 3.84% |
| CityState Savings Bank | 25,102,705.25 | 785,295,250.10 | 3.20% |
| The Queen City Development Bank | 20,592,170.96 | 693,438,533.93 | 2.97% |
| BPI Globe Banko Inc. Savings Bank | 12,702,565.90 | 449,784,483.73 | 2.82% |
| Bataan SLA | 1,976,531.02 | 76,234,112.66 | 2.59% |
| Progress SLA | 1,989,955.60 | 84,450,527.37 | 2.36% |
| Century Savings Bank | 17,954,166.36 | 870,581,931.91 | 2.06% |
| Merchants Savings & Loan Association Inc. | 430,465.95 | 703,603,788.65 | 0.06% |
| BDO Elite Savings Bank | 0.00 | 1,507,551,908.05 | 0.00% |
| Isla Bank (A Thrift Bank) Inc. | 0.00 | 627,832,458.81 | 0.00% |
| United Overseas Bank Philippines | 0.00 | 699,786,740.71 | 0.00% |
| Bank One Savings and Trust Corp. | NA | NA | NA |
| Grand Total | 23,300,204,891.32 | 73,521,285,791.14 | 31.69% |
Source: www.bsp.gov.ph
Classified Loans
But in a financial crisis, a loan that is current can very well become past due, and a past due loan can become a non-performing loan, and a non-performing loan can become a loan write-off. The real number to look at are the loans that the banks and BSP already consider doubtful: Classified Loans.
Investopedia.com defines "Classified Loans" as:
"Any bank loan that is in danger of default. Classified loans have unpaid interest and principal outstanding, and it is unclear whether the bank will be able to recoup the loan proceeds from the borrower. Banks usually categorize such loans as adversely classified assets on their books."
The US Federal Deposit Insurance Corporation (FDIC), similar to our very own Philippine Deposit Insurance Corporation (PDIC), defines Classified Loans as:
"Loans classified Loss are considered uncollectible and of such little value that their continuance as bankable assets is not warranted. This classification does not mean that the loan has absolutely no recovery or salvage value but rather it is not practical or desirable to defer writing off this basically worthless asset even though partial recovery may be effected in the future."
It is not clear as to how the BSP defines Classified Loans but their definition should hew very closely to the FDIC's own definition.
As of December 31, 2011, "Classified Loans and Other Risky Assets" of the Philippine Thrift Banking System amounted to PhP 67.639 billion or almost three times the size of the thrift banking system NPLs of PhP 23.300 billion for the same period. Consequently, any write-offs of Classified Loans will have almost three times the impact of an NPL write-off.
| Philippine Thrift Banking System | |||
| NPLs vs. Classified Loans | |||
| December 31, 2011 | |||
| NPL | Classified Loans | NPL/Classified Loans | |
| Bank | (In PHP) | (In PHP) | (In %) |
| Isla Bank (A Thrift Bank) Inc. | 0.00 | 33,069,070.56 | 0.00% |
| United Overseas Bank Philippines | 0.00 | 951,537,017.54 | 0.00% |
| City Savings Bank | 72,855,315.95 | 10,573,121,282.60 | 0.69% |
| Iloilo City Development Bank | 12,338,437.45 | 274,888,807.33 | 4.49% |
| China Bank Savings | 54,509,441.79 | 1,208,793,227.47 | 4.51% |
| Village SLA, Inc. | 31,931,894.94 | 569,848,206.79 | 5.60% |
| Tower Development Bank | 4,513,526.42 | 57,381,930.83 | 7.87% |
| Dumaguete City Development Bank | 18,114,585.98 | 204,759,000.00 | 8.85% |
| Business & Consumers Bank | 11,751,821.42 | 127,622,475.28 | 9.21% |
| RCBC Savings Bank | 1,239,993,237.59 | 9,577,290,000.00 | 12.95% |
| Life Savings Bank | 2,638,855.79 | 16,860,054.84 | 15.65% |
| GSIS Family Bank | 217,867,697.74 | 1,275,879,789.57 | 17.08% |
| University Savings Bank | 55,528,391.03 | 290,843,637.98 | 19.09% |
| Legazpi Savings Bank Inc. | 102,155,635.59 | 518,975,000.00 | 19.68% |
| Progress SLA | 1,989,955.60 | 9,197,077.59 | 21.64% |
| UCPB Savings Bank | 185,362,577.92 | 855,564,901.90 | 21.67% |
| Wealth Bank - A Development Bank | 51,817,961.85 | 215,458,544.06 | 24.05% |
| The Queen City Development Bank | 20,592,170.96 | 75,743,789.50 | 27.19% |
| Malayan Bank Savings & Mortgage Bank | 223,872,388.47 | 782,962,885.17 | 28.59% |
| Tong Yang Savings Bank Inc. | 82,586,107.99 | 263,590,268.59 | 31.33% |
| Cordillera Savings Bank | 16,370,965.30 | 45,719,657.34 | 35.81% |
| Farmers Savings & Loan Bank | 55,157,424.76 | 138,190,136.68 | 39.91% |
| Philippine Savings Bank | 4,248,590,693.36 | 10,452,572,837.64 | 40.65% |
| Pampanga Development Bank | 29,496,722.29 | 70,843,289.18 | 41.64% |
| Real Bank (A Thrift Bank) Inc. | 3,761,343,022.96 | 8,852,981,532.03 | 42.49% |
| Equicom SB | 164,853,333.13 | 381,515,427.95 | 43.21% |
| Bataan Development Bank | 49,547,170.51 | 102,400,000.00 | 48.39% |
| Opportunity Microfinance Bank | 53,153,241.19 | 107,584,749.69 | 49.41% |
| BPI Family Savings Bank | 3,921,923,095.70 | 7,872,799,433.83 | 49.82% |
| Premiere Development Bank | 393,266,678.29 | 742,024,745.08 | 53.00% |
| Merchants Savings & Loan Association Inc. | 430,465.95 | 795,000.00 | 54.15% |
| Quezon Coconut Producers SLB Inc. | 8,010,201.39 | 13,998,171.64 | 57.22% |
| Planters Development Bank | 2,353,987,030.03 | 4,100,834,157.00 | 57.40% |
| Philippine Business Bank | 680,760,722.79 | 1,184,818,220.39 | 57.46% |
| Luzon Development Bank | 84,342,263.81 | 142,000,679.14 | 59.40% |
| Producers Savings Bank | 121,753,296.44 | 191,129,350.45 | 63.70% |
| Maritime SLA | 10,512,842.67 | 16,482,260.48 | 63.78% |
| Metro Cebu Public Savings Bank | 33,842,528.83 | 50,081,370.58 | 67.58% |
| Century Savings Bank | 17,954,166.36 | 26,253,714.52 | 68.39% |
| Bataan SLA | 1,976,531.02 | 2,624,533.02 | 75.31% |
| Liberty Savings Bank | 9,732,755.30 | 12,698,330.40 | 76.65% |
| First Consolidated Bank | 421,499,695.76 | 511,430,636.29 | 82.42% |
| Sampaguita SLA | 5,344,828.88 | 6,191,662.17 | 86.32% |
| Philippine Postal Savings Bank | 273,002,996.63 | 312,457,608.44 | 87.37% |
| CityState Savings Bank | 25,102,705.25 | 27,889,419.18 | 90.01% |
| BPI Direct Savings Bank | 87,573,792.35 | 97,084,803.01 | 90.20% |
| Dungganon Bank | 4,689,862.96 | 5,087,866.78 | 92.18% |
| Citibank Savings Inc. | 2,688,780,795.67 | 2,893,117,949.23 | 92.94% |
| HSBC Savings Bank (Phils) Inc. | 84,603,585.27 | 87,153,778.34 | 97.07% |
| Allied Savings Bank | 214,173,045.67 | 218,446,865.10 | 98.04% |
| Lemery Savings & Loan Bank, Inc. | 18,652,187.00 | 18,674,522.56 | 99.88% |
| BPI Globe Banko Inc. Savings Bank | 12,702,565.90 | 12,702,565.90 | 100.00% |
| Card SME Bank Inc. (A Thrift Bank) | 8,633,315.66 | 8,633,315.66 | 100.00% |
| Hiyas Savings & Loan Bank | 68,179,670.76 | 68,179,670.76 | 100.00% |
| Malasiqui Progressive SLB, Inc. | 17,265,442.43 | 17,265,442.43 | 100.00% |
| Microfinance Maximum SB (Maxbank) | 3,336,315.55 | 3,336,315.55 | 100.00% |
| Northpoint Development Bank | 16,364,881.08 | 16,364,881.08 | 100.00% |
| Optimum Development Bank | 38,214,718.52 | 38,214,718.52 | 100.00% |
| Pacific Ace Savings Bank | 11,084,070.76 | 11,084,070.76 | 100.00% |
| Penbank, Inc. | 76,715,445.49 | 76,715,445.49 | 100.00% |
| Pridestar Development Bank | 9,865,126.75 | 9,865,126.75 | 100.00% |
| Sterling Bank of Asia Inc. | 761,557,701.00 | 761,557,701.00 | 100.00% |
| Sun Savings Bank | 5,479,669.65 | 5,479,669.65 | 100.00% |
| World Partners Bank (A Thrift Bank) | 39,957,315.77 | 39,957,315.77 | 100.00% |
| BDO Elite Savings Bank | 0.00 | 0.00 | NA |
| Bank One Savings and Trust Corp. | NA | NA | NA |
| Grand Total | 23,300,204,891.32 | 67,638,625,915.06 | 34.45% |
Source: www.bsp.gov.ph
This level of classified loans should be measured against the bank's "capital cushion" or its ability to absorb losses. Capital Cushion is normally defined as a bank's "Tangible Common Equity" plus its Loan Loss Reserves. Tangible Common Equity (TCE) refers to the subset of shareholders' equity that is not preferred equity and not intangible assets. So it excludes such items as Hybrid equity (like preferred shares) and goodwill.
By this measure, the level of "Classified Loans and other Risky Assets" amounts to 90.61% of the PHP 74.651 billion in Total Capital Cushion of Philippine Thrift Banks as of December 31, 2011.
| Philippine Thrift Banking System | |||
| Classified Loans as % of Total Capital Cushion | |||
| December 31, 2011 | |||
| Classified Loans | Total Capital Cushion | ||
| Bank | (In PHP) | (In PHP) | (In %) |
| Real Bank (A Thrift Bank) Inc. | 8,852,981,532.03 | 1,044,846,977.77 | 847.30% |
| City Savings Bank | 10,573,121,282.60 | 1,388,719,074.33 | 761.36% |
| Village SLA, Inc. | 569,848,206.79 | 83,288,037.75 | 684.19% |
| Iloilo City Development Bank | 274,888,807.33 | 60,472,657.10 | 454.57% |
| Legazpi Savings Bank Inc. | 518,975,000.00 | 170,602,061.13 | 304.20% |
| GSIS Family Bank | 1,275,879,789.57 | 487,593,604.82 | 261.67% |
| Business & Consumers Bank | 127,622,475.28 | 78,531,520.78 | 162.51% |
| China Bank Savings | 1,208,793,227.47 | 822,218,155.26 | 147.02% |
| RCBC Savings Bank | 9,577,290,000.00 | 6,621,590,303.77 | 144.64% |
| University Savings Bank | 290,843,637.98 | 208,738,927.20 | 139.33% |
| Bataan Development Bank | 102,400,000.00 | 74,095,120.90 | 138.20% |
| Farmers Savings & Loan Bank | 138,190,136.68 | 116,837,900.36 | 118.28% |
| Dumaguete City Development Bank | 204,759,000.00 | 203,793,878.67 | 100.47% |
| Planters Development Bank | 4,100,834,157.00 | 4,393,722,453.79 | 93.33% |
| Equicom SB | 381,515,427.95 | 472,581,826.89 | 80.73% |
| Opportunity Microfinance Bank | 107,584,749.69 | 137,541,004.61 | 78.22% |
| Premiere Development Bank | 742,024,745.08 | 956,754,306.80 | 77.56% |
| Citibank Savings Inc. | 2,893,117,949.23 | 3,801,262,095.38 | 76.11% |
| Philippine Savings Bank | 10,452,572,837.64 | 13,929,160,698.54 | 75.04% |
| Malayan Bank Savings & Mortgage Bank | 782,962,885.17 | 1,075,379,215.58 | 72.81% |
| Metro Cebu Public Savings Bank | 50,081,370.58 | 74,212,433.16 | 67.48% |
| United Overseas Bank Philippines | 951,537,017.54 | 1,485,808,841.71 | 64.04% |
| Tong Yang Savings Bank Inc. | 263,590,268.59 | 443,455,225.55 | 59.44% |
| Pampanga Development Bank | 70,843,289.18 | 120,343,323.41 | 58.87% |
| BPI Family Savings Bank | 7,872,799,433.83 | 13,962,882,381.92 | 56.38% |
| Wealth Bank - A Development Bank | 215,458,544.06 | 395,185,869.59 | 54.52% |
| Tower Development Bank | 57,381,930.83 | 112,678,828.58 | 50.93% |
| Sterling Bank of Asia Inc. | 761,557,701.00 | 1,704,899,830.40 | 44.67% |
| Philippine Business Bank | 1,184,818,220.39 | 2,774,250,378.64 | 42.71% |
| Hiyas Savings & Loan Bank | 68,179,670.76 | 164,502,210.42 | 41.45% |
| UCPB Savings Bank | 855,564,901.90 | 2,207,463,095.83 | 38.76% |
| Philippine Postal Savings Bank | 312,457,608.44 | 811,348,052.94 | 38.51% |
| Cordillera Savings Bank | 45,719,657.34 | 123,766,715.93 | 36.94% |
| Producers Savings Bank | 191,129,350.45 | 527,512,390.32 | 36.23% |
| Luzon Development Bank | 142,000,679.14 | 436,917,967.42 | 32.50% |
| Malasiqui Progressive SLB, Inc. | 17,265,442.43 | 54,828,649.13 | 31.49% |
| First Consolidated Bank | 511,430,636.29 | 1,673,870,535.21 | 30.55% |
| Penbank, Inc. | 76,715,445.49 | 254,791,038.35 | 30.11% |
| Northpoint Development Bank | 16,364,881.08 | 59,193,177.23 | 27.65% |
| Life Savings Bank | 16,860,054.84 | 63,645,807.09 | 26.49% |
| Lemery Savings & Loan Bank, Inc. | 18,674,522.56 | 73,882,141.35 | 25.28% |
| Quezon Coconut Producers SLB Inc. | 13,998,171.64 | 57,268,623.22 | 24.44% |
| Maritime SLA | 16,482,260.48 | 68,824,229.22 | 23.95% |
| World Partners Bank (A Thrift Bank) | 39,957,315.77 | 174,159,550.30 | 22.94% |
| Allied Savings Bank | 218,446,865.10 | 1,014,585,418.07 | 21.53% |
| Liberty Savings Bank | 12,698,330.40 | 59,726,549.24 | 21.26% |
| Pacific Ace Savings Bank | 11,084,070.76 | 72,593,155.07 | 15.27% |
| Pridestar Development Bank | 9,865,126.75 | 72,170,956.24 | 13.67% |
| BPI Direct Savings Bank | 97,084,803.01 | 715,894,536.42 | 13.56% |
| The Queen City Development Bank | 75,743,789.50 | 698,722,234.47 | 10.84% |
| Progress SLA | 9,197,077.59 | 85,031,839.07 | 10.82% |
| Sampaguita SLA | 6,191,662.17 | 69,148,222.58 | 8.95% |
| Dungganon Bank | 5,087,866.78 | 60,321,880.63 | 8.43% |
| Sun Savings Bank | 5,479,669.65 | 73,296,710.78 | 7.48% |
| Card SME Bank Inc. (A Thrift Bank) | 8,633,315.66 | 140,444,945.62 | 6.15% |
| Optimum Development Bank | 38,214,718.52 | 641,570,262.55 | 5.96% |
| Microfinance Maximum SB (Maxbank) | 3,336,315.55 | 61,222,373.26 | 5.45% |
| Isla Bank (A Thrift Bank) Inc. | 33,069,070.56 | 625,764,495.92 | 5.28% |
| HSBC Savings Bank (Phils) Inc. | 87,153,778.34 | 1,830,846,012.02 | 4.76% |
| CityState Savings Bank | 27,889,419.18 | 805,583,903.62 | 3.46% |
| Bataan SLA | 2,624,533.02 | 79,897,380.54 | 3.28% |
| Century Savings Bank | 26,253,714.52 | 846,901,386.59 | 3.10% |
| BPI Globe Banko Inc. Savings Bank | 12,702,565.90 | 551,847,301.15 | 2.30% |
| Merchants Savings & Loan Association Inc. | 795,000.00 | 721,264,073.21 | 0.11% |
| BDO Elite Savings Bank | 0.00 | 1,470,452,260.33 | 0.00% |
| Bank One Savings and Trust Corp. | NA | NA | NA |
| Grand Total | 67,638,625,915.06 | 74,650,707,015.73 | 90.61% |
Source: www.bsp.gov.ph
Stress Test Scenarios
Aggregate
So how will a 10%, 20%, 30%, 40%, and even 50% write-off of Classified Loans affect the Total Capital Cushion of the Philippine Thrift Banking System?
In the aggregate, if Classified Loans amount to 90.61% of the commercial banking system's Total Capital Cushion, then it follows that a 10% write-off of Classified Loans will reduce the total capital by 9.06% and a 50% write-off of classified loans will reduce the commercial banking system's Total Capital Cushion by 45.30%.
Individual Banks
A 10% write-off of Classified Loans would severely impact (by 30% or more) the Total Capital Cushion of five banks:
- Real Bank (A Thrift Bank) Inc. (84.73% reduction in Total Capital Cushion)
- City Savings Bank (76.14% reduction in Total Capital Cushion)
- Village SLA, Inc. (68.42% reduction in Total Capital Cushion)
- Iloilo City Development Bank (45.46% reduction in Total Capital Cushion)
- Legazpi Savings Bank Inc. (30.42% reduction in Total Capital Cushion)
A 20% write-off of Classified Loans will totally wipe out the Total Capital Cushion of three banks and severely impact the Total Capital Cushion of four banks:
- Real Bank (A Thrift Bank) Inc. (169.46% reduction in Total Capital Cushion)
- City Savings Bank (152.27% reduction in Total Capital Cushion)
- Village SLA, Inc. (136.84% reduction in Total Capital Cushion)
- Iloilo City Development Bank (90.91% reduction in Total Capital Cushion)
- Legazpi Savings Bank Inc. (60.84% reduction in Total Capital Cushion)
- GSIS Family Bank (52.33% reduction in Total Capital Cushion)
- Business & Consumers Bank (32.50% reduction in Total Capital Cushion)
- Real Bank (A Thrift Bank) Inc. (254.19% reduction in Total Capital Cushion)
- City Savings Bank (228.41% reduction in Total Capital Cushion)
- Village SLA, Inc. (205.26% reduction in Total Capital Cushion)
- Iloilo City Development Bank (136.37% reduction in Total Capital Cushion)
- Legazpi Savings Bank Inc. (91.26% reduction in Total Capital Cushion)
- GSIS Family Bank (78.50% reduction in Total Capital Cushion)
- Business & Consumers Bank (48.75% reduction in Total Capital Cushion)
- China Bank Savings (44.10% reduction in Total Capital Cushion)
- RCBC Savings Bank (43.39% reduction in Total Capital Cushion)
- University Savings Bank (41.80% reduction in Total Capital Cushion)
- Bataan Development Bank (41.46% reduction in Total Capital Cushion)
- Farmers Savings & Loan Bank (35.48% reduction in Total Capital Cushion)
- Dumaguete City Development Bank (30.14% reduction in Total Capital Cushion)
A 40% write-off of Classified Loans will totally wipe out the Total Capital Cushion of six banks and severely affect (reduce by 30% or more) the Total Capital Cushion of thirteen more banks:
- Real Bank (A Thrift Bank) Inc. (338.92% reduction in Total Capital Cushion)
- City Savings Bank (304.54% reduction in Total Capital Cushion)
- Village SLA, Inc. (273.68% reduction in Total Capital Cushion)
- Iloilo City Development Bank (181.83% reduction in Total Capital Cushion)
- Legazpi Savings Bank Inc. (121.68% reduction in Total Capital Cushion)
- GSIS Family Bank (104.67% reduction in Total Capital Cushion)
- Business & Consumers Bank (65.00% reduction in Total Capital Cushion)
- China Bank Savings (58.81% reduction in Total Capital Cushion)
- RCBC Savings Bank (57.85% reduction in Total Capital Cushion)
- University Savings Bank (55.73% reduction in Total Capital Cushion)
- Bataan Development Bank (55.28% reduction in Total Capital Cushion)
- Farmers Savings & Loan Bank (47.31% reduction in Total Capital Cushion)
- Dumaguete City Development Bank (40.19% reduction in Total Capital Cushion)
- Planters Development Bank (37.33% reduction in Total Capital Cushion)
- Equicom SB (32.29% reduction in Total Capital Cushion)
- Opportunity Microfinance Bank (31.29% reduction in Total Capital Cushion)
- Premiere Development Bank (31.02% reduction in Total Capital Cushion)
- Citibank Savings Inc. (30.44% reduction in Total Capital Cushion)
- Philippine Savings Bank (30.02% reduction in Total Capital Cushion)
A 50% write-off of Classified Loans will totally wipe out the Total Capital Cushion of six banks and severely affect (reduce by 30% or more) the Total Capital Cushion of sixteen more banks:
- Real Bank (A Thrift Bank) Inc. (423.65% reduction in Total Capital Cushion)
- City Savings Bank (380.68% reduction in Total Capital Cushion)
- Village SLA, Inc. (342.09% reduction in Total Capital Cushion)
- Iloilo City Development Bank (227.28% reduction in Total Capital Cushion)
- Legazpi Savings Bank Inc. (152.10% reduction in Total Capital Cushion)
- GSIS Family Bank (130.83% reduction in Total Capital Cushion)
- Business & Consumers Bank (81.26% reduction in Total Capital Cushion)
- China Bank Savings (73.51% reduction in Total Capital Cushion)
- RCBC Savings Bank (72.32% reduction in Total Capital Cushion)
- University Savings Bank (69.67% reduction in Total Capital Cushion)
- Bataan Development Bank (69.10% reduction in Total Capital Cushion)
- Farmers Savings & Loan Bank (59.14% reduction in Total Capital Cushion)
- Dumaguete City Development Bank (50.24% reduction in Total Capital Cushion)
- Planters Development Bank (46.67% reduction in Total Capital Cushion)
- Equicom SB (40.37% reduction in Total Capital Cushion)
- Opportunity Microfinance Bank (39.11% reduction in Total Capital Cushion)
- Premiere Development Bank (38.78% reduction in Total Capital Cushion)
- Citibank Savings Inc. (38.05% reduction in Total Capital Cushion)
- Philippine Savings Bank (37.52% reduction in Total Capital Cushion)
- Malayan Bank Savings & Mortgage Bank (36.04% reduction in Total Capital Cushion)
- Metro Cebu Public Savings Bank (33.74% reduction in Total Capital Cushion)
- United Overseas Bank Philippines (32.02% reduction in Total Capital Cushion)
Please bear in mind that a number of these banks are already very weak and are in distress. See a previous blog post "City Savings Takes the Silver in Insolvency". Moreover, their capital can be overstated. See a previous blog post "Philippine Thrift Banks with Overstated Capital as of December 31, 2011". As such, any reduction in their capital cushion could knock down an already weak bank.
| Philippine Thrift Banking System | |||||||
| Classified Loans as % of Total Capital Cushion | |||||||
| December 31, 2011 | |||||||
| Classified Loans | Total Capital Cushion | Impact of 10% Loss on Total Capital Cushion | Impact of 20% Loss on Total Capital Cushion | Impact of 30% Loss on Total Capital Cushion | Impact of 40% Loss on Total Capital Cushion | Impact of 50% Loss on Total Capital Cushion | |
| Bank | (In PHP) | (In PHP) | (In %) | (In %) | (In %) | (In %) | (In %) |
| Real Bank (A Thrift Bank) Inc. | 8,852,981,532.03 | 1,044,846,977.77 | 84.73% | 169.46% | 254.19% | 338.92% | 423.65% |
| City Savings Bank | 10,573,121,282.60 | 1,388,719,074.33 | 76.14% | 152.27% | 228.41% | 304.54% | 380.68% |
| Village SLA, Inc. | 569,848,206.79 | 83,288,037.75 | 68.42% | 136.84% | 205.26% | 273.68% | 342.09% |
| Iloilo City Development Bank | 274,888,807.33 | 60,472,657.10 | 45.46% | 90.91% | 136.37% | 181.83% | 227.28% |
| Legazpi Savings Bank Inc. | 518,975,000.00 | 170,602,061.13 | 30.42% | 60.84% | 91.26% | 121.68% | 152.10% |
| GSIS Family Bank | 1,275,879,789.57 | 487,593,604.82 | 26.17% | 52.33% | 78.50% | 104.67% | 130.83% |
| Business & Consumers Bank | 127,622,475.28 | 78,531,520.78 | 16.25% | 32.50% | 48.75% | 65.00% | 81.26% |
| China Bank Savings | 1,208,793,227.47 | 822,218,155.26 | 14.70% | 29.40% | 44.10% | 58.81% | 73.51% |
| RCBC Savings Bank | 9,577,290,000.00 | 6,621,590,303.77 | 14.46% | 28.93% | 43.39% | 57.85% | 72.32% |
| University Savings Bank | 290,843,637.98 | 208,738,927.20 | 13.93% | 27.87% | 41.80% | 55.73% | 69.67% |
| Bataan Development Bank | 102,400,000.00 | 74,095,120.90 | 13.82% | 27.64% | 41.46% | 55.28% | 69.10% |
| Farmers Savings & Loan Bank | 138,190,136.68 | 116,837,900.36 | 11.83% | 23.66% | 35.48% | 47.31% | 59.14% |
| Dumaguete City Development Bank | 204,759,000.00 | 203,793,878.67 | 10.05% | 20.09% | 30.14% | 40.19% | 50.24% |
| Planters Development Bank | 4,100,834,157.00 | 4,393,722,453.79 | 9.33% | 18.67% | 28.00% | 37.33% | 46.67% |
| Equicom SB | 381,515,427.95 | 472,581,826.89 | 8.07% | 16.15% | 24.22% | 32.29% | 40.37% |
| Opportunity Microfinance Bank | 107,584,749.69 | 137,541,004.61 | 7.82% | 15.64% | 23.47% | 31.29% | 39.11% |
| Premiere Development Bank | 742,024,745.08 | 956,754,306.80 | 7.76% | 15.51% | 23.27% | 31.02% | 38.78% |
| Citibank Savings Inc. | 2,893,117,949.23 | 3,801,262,095.38 | 7.61% | 15.22% | 22.83% | 30.44% | 38.05% |
| Philippine Savings Bank | 10,452,572,837.64 | 13,929,160,698.54 | 7.50% | 15.01% | 22.51% | 30.02% | 37.52% |
| Malayan Bank Savings & Mortgage Bank | 782,962,885.17 | 1,075,379,215.58 | 7.28% | 14.56% | 21.84% | 29.12% | 36.40% |
| Metro Cebu Public Savings Bank | 50,081,370.58 | 74,212,433.16 | 6.75% | 13.50% | 20.25% | 26.99% | 33.74% |
| United Overseas Bank Philippines | 951,537,017.54 | 1,485,808,841.71 | 6.40% | 12.81% | 19.21% | 25.62% | 32.02% |
| Tong Yang Savings Bank Inc. | 263,590,268.59 | 443,455,225.55 | 5.94% | 11.89% | 17.83% | 23.78% | 29.72% |
| Pampanga Development Bank | 70,843,289.18 | 120,343,323.41 | 5.89% | 11.77% | 17.66% | 23.55% | 29.43% |
| BPI Family Savings Bank | 7,872,799,433.83 | 13,962,882,381.92 | 5.64% | 11.28% | 16.92% | 22.55% | 28.19% |
| Wealth Bank - A Development Bank | 215,458,544.06 | 395,185,869.59 | 5.45% | 10.90% | 16.36% | 21.81% | 27.26% |
| Tower Development Bank | 57,381,930.83 | 112,678,828.58 | 5.09% | 10.19% | 15.28% | 20.37% | 25.46% |
| Sterling Bank of Asia Inc. | 761,557,701.00 | 1,704,899,830.40 | 4.47% | 8.93% | 13.40% | 17.87% | 22.33% |
| Philippine Business Bank | 1,184,818,220.39 | 2,774,250,378.64 | 4.27% | 8.54% | 12.81% | 17.08% | 21.35% |
| Hiyas Savings & Loan Bank | 68,179,670.76 | 164,502,210.42 | 4.14% | 8.29% | 12.43% | 16.58% | 20.72% |
| UCPB Savings Bank | 855,564,901.90 | 2,207,463,095.83 | 3.88% | 7.75% | 11.63% | 15.50% | 19.38% |
| Philippine Postal Savings Bank | 312,457,608.44 | 811,348,052.94 | 3.85% | 7.70% | 11.55% | 15.40% | 19.26% |
| Cordillera Savings Bank | 45,719,657.34 | 123,766,715.93 | 3.69% | 7.39% | 11.08% | 14.78% | 18.47% |
| Producers Savings Bank | 191,129,350.45 | 527,512,390.32 | 3.62% | 7.25% | 10.87% | 14.49% | 18.12% |
| Luzon Development Bank | 142,000,679.14 | 436,917,967.42 | 3.25% | 6.50% | 9.75% | 13.00% | 16.25% |
| Malasiqui Progressive SLB, Inc. | 17,265,442.43 | 54,828,649.13 | 3.15% | 6.30% | 9.45% | 12.60% | 15.74% |
| First Consolidated Bank | 511,430,636.29 | 1,673,870,535.21 | 3.06% | 6.11% | 9.17% | 12.22% | 15.28% |
| Penbank, Inc. | 76,715,445.49 | 254,791,038.35 | 3.01% | 6.02% | 9.03% | 12.04% | 15.05% |
| Northpoint Development Bank | 16,364,881.08 | 59,193,177.23 | 2.76% | 5.53% | 8.29% | 11.06% | 13.82% |
| Life Savings Bank | 16,860,054.84 | 63,645,807.09 | 2.65% | 5.30% | 7.95% | 10.60% | 13.25% |
| Lemery Savings & Loan Bank, Inc. | 18,674,522.56 | 73,882,141.35 | 2.53% | 5.06% | 7.58% | 10.11% | 12.64% |
| Quezon Coconut Producers SLB Inc. | 13,998,171.64 | 57,268,623.22 | 2.44% | 4.89% | 7.33% | 9.78% | 12.22% |
| Maritime SLA | 16,482,260.48 | 68,824,229.22 | 2.39% | 4.79% | 7.18% | 9.58% | 11.97% |
| World Partners Bank (A Thrift Bank) | 39,957,315.77 | 174,159,550.30 | 2.29% | 4.59% | 6.88% | 9.18% | 11.47% |
| Allied Savings Bank | 218,446,865.10 | 1,014,585,418.07 | 2.15% | 4.31% | 6.46% | 8.61% | 10.77% |
| Liberty Savings Bank | 12,698,330.40 | 59,726,549.24 | 2.13% | 4.25% | 6.38% | 8.50% | 10.63% |
| Pacific Ace Savings Bank | 11,084,070.76 | 72,593,155.07 | 1.53% | 3.05% | 4.58% | 6.11% | 7.63% |
| Pridestar Development Bank | 9,865,126.75 | 72,170,956.24 | 1.37% | 2.73% | 4.10% | 5.47% | 6.83% |
| BPI Direct Savings Bank | 97,084,803.01 | 715,894,536.42 | 1.36% | 2.71% | 4.07% | 5.42% | 6.78% |
| The Queen City Development Bank | 75,743,789.50 | 698,722,234.47 | 1.08% | 2.17% | 3.25% | 4.34% | 5.42% |
| Progress SLA | 9,197,077.59 | 85,031,839.07 | 1.08% | 2.16% | 3.24% | 4.33% | 5.41% |
| Sampaguita SLA | 6,191,662.17 | 69,148,222.58 | 0.90% | 1.79% | 2.69% | 3.58% | 4.48% |
| Dungganon Bank | 5,087,866.78 | 60,321,880.63 | 0.84% | 1.69% | 2.53% | 3.37% | 4.22% |
| Sun Savings Bank | 5,479,669.65 | 73,296,710.78 | 0.75% | 1.50% | 2.24% | 2.99% | 3.74% |
| Card SME Bank Inc. (A Thrift Bank) | 8,633,315.66 | 140,444,945.62 | 0.61% | 1.23% | 1.84% | 2.46% | 3.07% |
| Optimum Development Bank | 38,214,718.52 | 641,570,262.55 | 0.60% | 1.19% | 1.79% | 2.38% | 2.98% |
| Microfinance Maximum SB (Maxbank) | 3,336,315.55 | 61,222,373.26 | 0.54% | 1.09% | 1.63% | 2.18% | 2.72% |
| Isla Bank (A Thrift Bank) Inc. | 33,069,070.56 | 625,764,495.92 | 0.53% | 1.06% | 1.59% | 2.11% | 2.64% |
| HSBC Savings Bank (Phils) Inc. | 87,153,778.34 | 1,830,846,012.02 | 0.48% | 0.95% | 1.43% | 1.90% | 2.38% |
| CityState Savings Bank | 27,889,419.18 | 805,583,903.62 | 0.35% | 0.69% | 1.04% | 1.38% | 1.73% |
| Bataan SLA | 2,624,533.02 | 79,897,380.54 | 0.33% | 0.66% | 0.99% | 1.31% | 1.64% |
| Century Savings Bank | 26,253,714.52 | 846,901,386.59 | 0.31% | 0.62% | 0.93% | 1.24% | 1.55% |
| BPI Globe Banko Inc. Savings Bank | 12,702,565.90 | 551,847,301.15 | 0.23% | 0.46% | 0.69% | 0.92% | 1.15% |
| Merchants Savings & Loan Association Inc. | 795,000.00 | 721,264,073.21 | 0.01% | 0.02% | 0.03% | 0.04% | 0.06% |
| BDO Elite Savings Bank | 0.00 | 1,470,452,260.33 | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% |
| Bank One Savings and Trust Corp. | NA | NA | NA | NA | NA | NA | NA |
| Grand Total | 67,638,625,915.06 | 74,650,707,015.73 | 9.06% | 18.12% | 27.18% | 36.24% | 45.30% |
Source: www.bsp.gov.ph
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