Editor's Note: The ratio of Distressed Assets to Total Capital Cushion is a variant of the famous Texas Ratio, which was widely used by US financial regulators to predict bank failure during the US Savings and Loan Crisis in the 1980s and early 1990s. The basic premise is that a bank with Distressed Assets greater than its Capital Cushion is in danger of insolvency, because a significant drop in the value of the Distressed Assets will eat into a significant amount of the bank's capital. For a more detailed discussion of this ratio, please visit a previous blog post: The Texas Ratio of Select Philippine Banks
Editor's Note: This is an update of an earlier post: "Among Listed Philippine Banks, PNB Takes the Silver in Insolvency - September 30, 2012" dated November 26, 2012.
Based on the individual Published Statements of Condition for Listed Philippine Banks, the Total Distressed Assets increased by Php 6.447 billion or 1.73% from September 30, 2012 to December 31, 2012. This was offset by an increase of Php 26.397 billion or 4.32% in the Total Capital Cushion of these banks during the same period. As a result, the Listed Banks Ratio of Distressed Assets to Total Capital Cushion decreased by 1.52% from 61.07% as of September 30, 2012 to 59.55% as of December 31, 2012.
Please note that the ratio of Distressed Assets to Total Capital Cushion of two banks on this list is above the borderline level of 100.00%. These banks have been classified as distressed and are highlighted in yellow. These banks are as follows:
- China Bank Savings, Inc. has a borderline insolvency ratio of 240.64% as of December 31, 2012, up a very significant 55.11% from 185.52% as of September 30, 2012. Although China Bank Savings, Inc. is not listed, its parent, China Banking Corporation, is.
- Philippine National Bank (PNB) has a borderline insolvency ratio of 139.26% as of December 31, 2012, down 17.03% from 156.29% as of September 30, 2012.
The Published Statement of Condition of Philippine Bank of Communications (PBCom) was not availabe for the period ending December 31, 2012.
The banks that had significant increases in their distressed asset ratios for the quarterly period ending December 31, 2012 were:
- East West Banking Corporation, whose distressed ratio increased from 48.36% as of September 30, 2012 to 69.17% as of December 31, 2012.
- China Bank Savings, Inc., whose distressed ratio increased from 185.52% as of September 30, 2012 to 240.64% as of December 31, 2012.
Listed Philippine Banks | ||||
Total Distressed Assets/Total Capital Cushion | ||||
September 30, 2012 to December 31, 2012 | ||||
Bank | September 30, 2012 | December 31, 2012 | Variance | % Variance |
East West Banking Corporation | 48.36% | 69.17% | 20.81% | 43.03% |
China Bank Savings, Inc. | 185.52% | 240.64% | 55.11% | 29.71% |
CityState Savings Bank | 38.57% | 44.00% | 5.43% | 14.09% |
Philippine Savings Bank | 88.92% | 101.17% | 12.25% | 13.78% |
Security Bank Corporation | 24.36% | 26.80% | 2.44% | 10.01% |
Bank of the Philippine Islands | 50.40% | 55.07% | 4.67% | 9.26% |
Rizal Commercial Banking Corporation | 68.77% | 74.25% | 5.47% | 7.96% |
Philippine Trust Company | 49.11% | 48.03% | -1.07% | -2.19% |
Banco de Oro Unibank | 48.21% | 46.43% | -1.79% | -3.71% |
Allied Banking Corporation | 64.41% | 61.43% | -2.98% | -4.63% |
Philippine National Bank | 156.29% | 139.26% | -17.03% | -10.89% |
Metropolitan Bank & Trust Company | 58.94% | 51.59% | -7.35% | -12.48% |
Union Bank of the Philippines | 87.48% | 76.56% | -10.92% | -12.48% |
China Banking Corporation | 53.38% | 44.11% | -9.27% | -17.36% |
Grand Total | 61.07% | 59.55% | -1.52% | -2.49% |
Listed Philippine Banks | |||||||||||||||||||||||
Total Distressed Assets/Total Capital Cushion | |||||||||||||||||||||||
September 30, 2012 to December 31, 2012 | |||||||||||||||||||||||
September 30, 2012 | December 31, 2012 | Variance | % Variance | ||||||||||||||||||||
Total Distressed Assets | Total Capital Cushion | Distressed Assets/Total Capital Cushion | Total Distressed Assets | Total Capital Cushion | Distressed Assets/Total Capital Cushion | Total Distressed Assets | Total Capital Cushion | Distressed Assets/Total Capital Cushion | Total Distressed Assets | Total Capital Cushion | Distressed Assets/Total Capital Cushion | ||||||||||||
Bank | (In PhP) | (In PhP) | (In %) | (In PhP) | (In PhP) | (In %) | (In PhP) | (In PhP) | (In %) | (In PhP) | (In PhP) | (In %) | |||||||||||
China Bank Savings, Inc. | 1,898,277,021.68 | 1,023,197,782.14 | 185.52% | 2,193,496,131.15 | 911,544,737.69 | 240.64% | 295,219,109.47 | -111,653,044.45 | 55.11% | 15.55% | -10.91% | 29.71% | |||||||||||
Philippine National Bank | 50,799,838,940.95 | 32,504,359,516.71 | 156.29% | 50,766,564,045.82 | 36,454,637,515.91 | 139.26% | -33,274,895.13 | 3,950,277,999.20 | -17.03% | -0.07% | 12.15% | -10.89% | |||||||||||
Philippine Savings Bank | 14,692,734,483.48 | 16,524,087,878.48 | 88.92% | 16,254,121,220.71 | 16,065,835,469.57 | 101.17% | 1,561,386,737.23 | -458,252,408.91 | 12.25% | 10.63% | -2.77% | 13.78% | |||||||||||
Union Bank of the Philippines | 38,394,556,414.93 | 43,887,492,186.78 | 87.48% | 40,003,600,777.57 | 52,249,323,368.84 | 76.56% | 1,609,044,362.64 | 8,361,831,182.06 | -10.92% | 4.19% | 19.05% | -12.48% | |||||||||||
Rizal Commercial Banking Corporation | 25,702,007,474.49 | 37,372,568,399.29 | 68.77% | 26,931,182,478.09 | 36,272,524,028.33 | 74.25% | 1,229,175,003.60 | -1,100,044,370.96 | 5.47% | 4.78% | -2.94% | 7.96% | |||||||||||
East West Banking Corporation | 8,837,712,599.78 | 18,274,068,390.58 | 48.36% | 12,241,660,915.00 | 17,697,163,565.41 | 69.17% | 3,403,948,315.22 | -576,904,825.17 | 20.81% | 38.52% | -3.16% | 43.03% | |||||||||||
Allied Banking Corporation | 13,279,854,327.10 | 20,618,612,108.27 | 64.41% | 13,226,664,523.39 | 21,532,539,291.61 | 61.43% | -53,189,803.71 | 913,927,183.34 | -2.98% | -0.40% | 4.43% | -4.63% | |||||||||||
Bank of the Philippine Islands | 43,970,127,078.00 | 87,241,945,395.00 | 50.40% | 46,085,756,663.00 | 83,688,934,943.00 | 55.07% | 2,115,629,585.00 | -3,553,010,452.00 | 4.67% | 4.81% | -4.07% | 9.26% | |||||||||||
Metropolitan Bank & Trust Company | 58,589,388,144.26 | 99,399,052,866.07 | 58.94% | 59,066,123,023.34 | 114,491,444,450.66 | 51.59% | 476,734,879.08 | 15,092,391,584.59 | -7.35% | 0.81% | 15.18% | -12.48% | |||||||||||
Philippine Trust Company | 8,158,501,407.67 | 16,613,937,357.88 | 49.11% | 7,993,333,168.52 | 16,641,374,510.58 | 48.03% | -165,168,239.15 | 27,437,152.70 | -1.07% | -2.02% | 0.17% | -2.19% | |||||||||||
Banco de Oro Unibank | 79,441,752,672.48 | 164,765,851,685.01 | 48.21% | 76,233,226,086.74 | 164,200,302,494.77 | 46.43% | -3,208,526,585.74 | -565,549,190.24 | -1.79% | -4.04% | -0.34% | -3.71% | |||||||||||
China Banking Corporation | 21,113,412,180.64 | 39,555,560,128.40 | 53.38% | 19,660,385,488.71 | 44,573,150,968.01 | 44.11% | -1,453,026,691.93 | 5,017,590,839.61 | -9.27% | -6.88% | 12.68% | -17.36% | |||||||||||
CityState Savings Bank | 311,081,927.08 | 806,533,911.73 | 38.57% | 355,639,804.32 | 808,185,795.23 | 44.00% | 44,557,877.24 | 1,651,883.50 | 5.43% | 14.32% | 0.20% | 14.09% | |||||||||||
Security Bank Corporation | 7,848,582,981.88 | 32,217,229,745.77 | 24.36% | 8,472,633,153.76 | 31,614,925,250.60 | 26.80% | 624,050,171.88 | -602,304,495.17 | 2.44% | 7.95% | -1.87% | 10.01% | |||||||||||
Grand Total | 373,037,827,654.42 | 610,804,497,352.11 | 61.07% | 379,484,387,480.12 | 637,201,886,390.21 | 59.55% | 6,446,559,825.70 | 26,397,389,038.10 | -1.52% | 1.73% | 4.32% | -2.49% |
Source: www.bsp.gov.ph and www.pse.com.ph
Disclaimer:
This list only serves as a screening guide. It is not a definitive guide and must be taken in the context of other factors. The figures are based on the individual banks' statement of condition as of September 30, 2012 and December 31, 2012 as published in the BSP website (www.bsp.gov.ph) or the Philippine Stock Exchange website (www.pse.com.ph) or the individual bank's own website. For this analysis, no attempt was made to go through the audited financial statements of each bank. Readers are suggested to make their own investigations and verify the figures presented. Both BSP and PDIC have their own problem bank screening systems that are much more sophisticated in scope and design, given that they have more access to information over the banks they regulate.
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