But can these banks do so? The answer is: yes but only for some banks. As can be seen from the table below, only six banks have the Stockholders Equity (SE) to absorb these Deferred Charges:
- Philippine National Bank (Deferred Charges of 23.65% of SE)
- Bank of Commerce (Deferred Charges of 6.30% of SE)
- Land Bank of the Philippines (Deferred Charges of 4.78% of SE)
- Rizal Commercial Banking Corporation (Deferred Charges of 5.38% of SE)
- Philippine Veterans Bank (Deferred Charges of 1.02% of SE)
- Banco De Oro Unibank, Inc. (Deferred Charges of 0.25% of SE)
It must be noted that three of these banks are considered borderline insolvent (highlighted in yellow): Philippine National Bank, Bank of Commerce and Philippine Veterans Bank. For more information on distressed banks, please see the previous blog post: "Philippine U/KBs Show Some Deterioration in the 2nd Qtr. of 2012".
For two of the banks, booking their Deferred Charges immediately will only serve to impair 25% or more of their Stockholders Equity:
- United Coconut Planters Bank (Deferred Charges of 59.13% of SE)
- Philippine Bank of Communications (Deferred Charges of 50.08% of SE)
Retained Earnings
Only four banks have sufficient Retained Earnings (RE) to absorb their unbooked losses:
- Rizal Commercial Banking Corporation (Deferred Charges of 18.20% of RE)
- Land Bank of the Philippines (Deferred Charges of 11.01% of RE)
- Philippine Veterans Bank (Deferred Charges of 1.97% of RE)
- Banco de Oro Unibank Inc. (Deferred Charges of 0.87% of RE)
- United Coconut Planters Bank (Deferred Charges of 357.35% of RE)
- Philippine National Bank (Deferred Charges of 141.36% of RE)
It should be noted that Philippine National Bank recently merged with Allied Bank. Although Allied Bank is smaller than PNB, it has a substantial amount of Retained Earnings (PhP 13.982 billion). It is not clear how the this merger will impact the combined entities financial statements.
Two of the banks with substantial Deferred Charges have negative Retained Earnings. As such, they do not have the capacity to absorb additional losses.
- Bank of Commerce (Retained Earnings of - PhP 3.576 billion vs. Deferred Charges of PhP 1.107 billion)
- Philippine Bank of Communications (Retained Earnings of - PhP 4.774 billion vs. Deferred Charges of PhP 4.137 billion)
For more information of these Deferred Charges, please consult three previous blog posts:"Can Philippine Commercial Banks Charge their Unbooked Losses Against Retained Earnings?", "Philippine Commercial Banks with Overstated Capital as of December 31, 2011" and "BSP's Ampaw Accounting System".
Philippine Universal and Commercial Banking System | ||||
Unbooked Losses and Deferred Charges Not Yet Written Down | ||||
Impact on Stockholders Equity | ||||
In PhP | ||||
June 30, 2012 | ||||
Bank | Unbooked Losses | SE | Adjusted SE | Impact on SE |
United Coconut Planters Bank | 10,952,910,818.55 | 18,524,593,394.88 | 7,571,682,576.33 | 59.13% |
Philippine Bank of Communications | 4,137,999,860.19 | 8,262,907,312.02 | 4,124,907,451.83 | 50.08% |
Philippine National Bank | 8,779,267,097.24 | 37,122,489,253.60 | 28,343,222,156.36 | 23.65% |
Bank of Commerce | 1,106,707,574.74 | 17,557,056,210.05 | 16,450,348,635.31 | 6.30% |
Land Bank of the Philippines | 3,443,730,242.46 | 72,035,398,618.59 | 68,591,668,376.13 | 4.78% |
Rizal Commercial Banking Corporation | 1,924,235,024.92 | 40,339,304,322.02 | 38,415,069,297.10 | 4.77% |
Philippine Veterans Bank | 52,872,145.53 | 5,182,204,888.33 | 5,129,332,742.80 | 1.02% |
Banco De Oro Unibank | 252,603,679.15 | 101,929,325,323.67 | 101,676,721,644.52 | 0.25% |
Al-Amanah Islamic Bank of the Philippines | 0.00 | 473,003,657.24 | 473,003,657.24 | 0.00% |
Allied Banking Corporation | 0.00 | 18,326,663,200.68 | 18,326,663,200.68 | 0.00% |
ANZ Banking Group Ltd | 0.00 | 2,023,998,541.56 | 2,023,998,541.56 | 0.00% |
Asia United Bank Corporation | 0.00 | 10,173,091,443.18 | 10,173,091,443.18 | 0.00% |
Bangkok Bank Public Co. Ltd | 0.00 | 1,150,161,682.46 | 1,150,161,682.46 | 0.00% |
Bank of America N.A. | 0.00 | 596,946,705.20 | 596,946,705.20 | 0.00% |
Bank of China Limited - Manila Branch | 0.00 | 610,490,846.11 | 610,490,846.11 | 0.00% |
Bank of the Philippine Islands | 0.00 | 87,074,496,134.62 | 87,074,496,134.62 | 0.00% |
BDO Private Bank, Inc. | 0.00 | 5,204,459,324.38 | 5,204,459,324.38 | 0.00% |
China Banking Corporation | 0.00 | 36,037,127,084.48 | 36,037,127,084.48 | 0.00% |
Chinatrust (Philippines) Commercial Banking Corporation | 0.00 | 6,118,237,659.45 | 6,118,237,659.45 | 0.00% |
Citibank N.A. | 0.00 | 7,841,168,502.18 | 7,841,168,502.18 | 0.00% |
Deutsche Bank AG | 0.00 | 1,617,692,819.39 | 1,617,692,819.39 | 0.00% |
Development Bank of the Philippines | 0.00 | 39,139,801,398.21 | 39,139,801,398.21 | 0.00% |
East West Banking Corporation | 0.00 | 16,170,114,535.46 | 16,170,114,535.46 | 0.00% |
HongKong & Shanghai Banking Corporation | 0.00 | 5,388,712,213.20 | 5,388,712,213.20 | 0.00% |
Internationale Nederlanden Groep BK | 0.00 | 2,771,241,312.15 | 2,771,241,312.15 | 0.00% |
JP Morgan Chase National Bank Association | 0.00 | 1,727,884,545.30 | 1,727,884,545.30 | 0.00% |
Korea Exchange Bank | 0.00 | 561,460,316.56 | 561,460,316.56 | 0.00% |
Maybank Philippines Inc. | 0.00 | 5,535,707,537.03 | 5,535,707,537.03 | 0.00% |
Mega International Commercial Bank Company Limited | 0.00 | 691,445,235.15 | 691,445,235.15 | 0.00% |
Metropolitan Bank & Trust Company | 0.00 | 106,194,109,504.71 | 106,194,109,504.71 | 0.00% |
Mizuho Corporate Bank Ltd. - Manila Branch | 0.00 | 1,275,769,667.83 | 1,275,769,667.83 | 0.00% |
Philippine Trust Company | 0.00 | 15,758,749,258.44 | 15,758,749,258.44 | 0.00% |
Robinsons Bank Corporation | 0.00 | 5,400,718,494.91 | 5,400,718,494.91 | 0.00% |
Security Bank Corporation | 0.00 | 34,857,762,333.00 | 34,857,762,333.00 | 0.00% |
Standard Chartered Bank | 0.00 | 1,662,661,839.14 | 1,662,661,839.14 | 0.00% |
The Bank of Tokyo - Mitsubishi UFJ Ltd | 0.00 | 746,456,907.95 | 746,456,907.95 | 0.00% |
Union Bank of the Philippines | 0.00 | 39,593,140,857.56 | 39,593,140,857.56 | 0.00% |
Grand Total | 30,650,326,442.78 | 755,676,552,880.69 | 725,026,226,437.91 | 4.06% |
Source: www.bsp.gov.ph
Philippine Universal and Commercial Banking System | ||||
Unbooked Losses and Deferred Charges Not Yet Written Down | ||||
Impact on Retained Earnings | ||||
In PhP | ||||
June 30, 2012 | ||||
Bank | Unbooked Losses | Retained Earnings | Adjusted RE | Impact on RE |
United Coconut Planters Bank | 10,952,910,818.55 | 3,065,052,157.35 | -7,887,858,661.20 | 357.35% |
Philippine National Bank | 8,779,267,097.24 | 6,210,577,518.79 | -2,568,689,578.45 | 141.36% |
Rizal Commercial Banking Corporation | 1,924,235,024.92 | 10,570,942,976.04 | 8,646,707,951.12 | 18.20% |
Land Bank of the Philippines | 3,443,730,242.46 | 31,266,626,868.17 | 27,822,896,625.71 | 11.01% |
Philippine Veterans Bank | 52,872,145.53 | 2,679,845,297.09 | 2,626,973,151.56 | 1.97% |
Banco De Oro Unibank | 252,603,679.15 | 28,999,195,690.03 | 28,746,592,010.88 | 0.87% |
Bank of Commerce | 1,106,707,574.74 | -3,576,287,532.96 | -4,682,995,107.70 | -30.95% |
Philippine Bank of Communications | 4,137,999,860.19 | -4,774,481,497.18 | -8,912,481,357.37 | -86.67% |
Grand Total | 30,650,326,442.78 | 74,441,471,477.33 | 43,791,145,034.55 | 41.17% |
Source: www.bsp.gov.ph
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