Philippine U/KBs Improve in the 4th Qtr. of 2012

Editor's Note: The Philippine Deposit Insurance Corporation (PDIC) advised consumers to wisely choose the banks where they will deposit their money. The trouble is, most depositors don't and can't read financial statements before they open a bank account. The regulators, whose job is to safeguard the public's money, have not done a good job recently.  In the past ten years, two commercial banks, twenty-one thrift banks, and a staggering 187 rural banks have collapsed, often quite suddenly and without warning. Regulators do have a problem bank list that they do not divulge to the public, for fear of sparking another bank run. So who can the public turn to, to advise them where to put their money? No one, except the banks themselves who will always promote their self-interests. This analysis is an attempt to fill in that knowledge gap, by screening out the weaker banks that seem ready to implode at any given moment.

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  

Based on the individual Published Statements of Condition for the Philippine Commercial Banking Industry (from www.bsp.gov.ph), Total Distressed Assets of Philippine Commercial Banks increased by Php 3.746 billion or 0.65% from September 30, 2012 to December 31, 2012.  This increase was compounded by a 4.83% increase in their Total Capital Cushion during the same period.  As a result, the Ratio of Total Distressed Assets to Total Capital Cushion of Philippine Commercial Banks decreased by 2.91%, from 72.88% as of September 30, 2012 to 69.97% as of December 31, 2012. (Distressed banks are highlighted in yellow).

Those banks that posted significant improvements in this ratio include:

1. JP Morgan Chase National Bank Association (87.07% decrease)
2. The Bank of Tokyo - Mitsubishi UFJ Ltd (75.20% decrease)
3. Citibank N.A. (24.93% decrease)
4. China Banking Corporation (17.36% decrease)

The banks that exhibited significant deterioration in this ratio include:

1. Philippine Bank of Communications (708.42% increase)
2. ANZ Banking Group Ltd (183.54% increase)
3. Deutsche Bank AG (141.10% increase)
4. Robinsons Bank Corporation (86.11% increase)
5. BDO Private Bank, Inc. (79.31% increase)
6. Mizuho Corporate Bank Ltd. - Manila Branch (46.91% increase)
7. East West Banking Corporation (38.79% increase)
8. Philippine Veterans Bank (21.74% increase)
9. Bank of America N.A. (20.07% increase)

Distressed Banks

Three of the banks with significant increases have been classified as distressed based on their ratio of Total Distressed Assets to Total Capital Cushion as of the 4th Qtr. of  2012.  Three banks ranked as distressed in the 3rd Qtr. of 2012 showed significant deterioration in their distressed ratios as of September 30, 2012.  These banks are:

1. Philippine Bank of Communications (708.42% increase)
2. Deutsche Bank AG (141.10% increase)
3. Philippine Veterans Bank (21.74% increase)

Philippine Bank of Communications now ranks as the most distressed domestic Universal and Commercial Bank in the country.  Its Total Distressed Assets are more than 12 times its Total Capital Cushion.  It must be noted that this ratio is up very sharply from year-end 2011, when its Total Distressed Assets were 1.6 times its Total Capital Cushion.  The second most distressed Universal and Commercial Bank in the country is Bank of China Limited- Manila Branch.  Its Total Distressed Assets are almost than nine times its Total Capital Cushion. United Coconut Planters Bank now ranks as the third most distressed domestic Universal and Commercial bank in the country.  Its Total Distressed Assets are almost than seven times its Total Capital Cushion.  It must be noted that this ratio is down significantly from year-end 2011, when its Total Distressed Assets were ten times its Total Capital Cushion.

The list of banks classified as distressed as of December 31, 2012 are as follows:

1. Philippine Bank of Communications (Distressed Ratio of 1284.28%)
2. Bank of China Limited - Manila Branch (Distressed Ratio of 891.14%)
3. United Coconut Planters Bank (Distressed Ratio of 687.55%)
4. Deutsche Bank AG (Distressed Ratio of 223.77%)
5. Citibank N.A. (Distressed Ratio of 189.76)
6. Standard Chartered Bank (Distressed Ratio of 186.36%)
7. Bank of Commerce (Distressed Ratio of 165.01%)
8. Philippine National Bank (Distressed Ratio of 139.26%)
9. Philippine Veterans Bank (Distressed Ratio of 124.35%)
10. Korea Exchange Bank (Distressed Ratio of 106.70%)

Deutsche Bank AG, which had a Total Distressed Asset Ratio of 92.81% as of September 30, 2012 came back onto the list of distressed banks, with a Total Distressed Asset Ratio of 223.77% as of December 31, 2012.

As a group the distressed banks showed some very slight improvement in their Total Distressed Assets/Total Capital Cushion Ratios.  This ratio now stands at 219.72% as of December 31, 2012, down from 221.28% as of September 30, 2012.  For a list of Distressed Banks as of September 30, 2012, please check out a previous blog post: "Philippine U/KBs Improve in the 3rd Qtr. of 2012".

Philippine Universal and Commercial Banking System
Total Distressed Assets/ Total Capital Cushion
September 30, 2012 to December 31, 2012
In %
Bank	December 31, 2012	September 30, 2012	Variance	% Variance
Philippine Bank of Communications	1284.28%	158.86%	1125.42%	708.42%
ANZ Banking Group Ltd	55.86%	19.70%	36.16%	183.54%
Deutsche Bank AG	223.77%	92.81%	130.96%	141.10%
Robinsons Bank Corporation	40.26%	21.63%	18.63%	86.11%
BDO Private Bank, Inc.	6.27%	3.50%	2.77%	79.31%
Mizuho Corporate Bank Ltd. - Manila Branch	52.81%	35.95%	16.86%	46.91%
East West Banking Corporation	69.17%	49.84%	19.33%	38.79%
Philippine Veterans Bank	124.35%	102.14%	22.21%	21.74%
Bank of America N.A.	4.75%	3.96%	0.79%	20.07%
Security Bank Corporation	26.80%	24.36%	2.44%	10.01%
Bank of China Limited - Manila Branch	891.14%	815.07%	76.07%	9.33%
Rizal Commercial Banking Corporation	74.25%	68.77%	5.47%	7.96%
Development Bank of the Philippines	50.02%	46.81%	3.20%	6.84%
HongKong & Shanghai Banking Corporation	75.59%	70.97%	4.62%	6.50%
Standard Chartered Bank	186.36%	177.56%	8.81%	4.96%
Maybank Philippines Inc.	58.60%	57.16%	1.44%	2.51%
Bangkok Bank Public Co. Ltd	2.38%	2.35%	0.03%	1.22%
Bank of Commerce	165.01%	164.70%	0.31%	0.19%
United Coconut Planters Bank	687.55%	691.24%	-3.69%	-0.53%
Internationale Nederlanden Groep BK	24.97%	25.31%	-0.34%	-1.32%
Land Bank of the Philippines	53.49%	54.31%	-0.81%	-1.49%
Philippine Trust Company	48.03%	49.11%	-1.07%	-2.19%
Allied Banking Corporation	62.94%	64.41%	-1.47%	-2.28%
Korea Exchange Bank	106.70%	110.69%	-3.99%	-3.61%
Banco De Oro Unibank	46.43%	48.21%	-1.79%	-3.71%
Chinatrust (Philippines) Commercial Banking Corporation	19.61%	20.54%	-0.92%	-4.49%
Bank of the Philippine Islands	46.71%	50.40%	-3.69%	-7.32%
Mega International Commercial Bank Company Limited	88.58%	96.65%	-8.07%	-8.35%
Asia United Bank Corporation	81.91%	89.77%	-7.85%	-8.75%
Al-Amanah Islamic Bank of the Philippines	16.95%	18.71%	-1.76%	-9.42%
Philippine National Bank	139.26%	156.29%	-17.03%	-10.89%
Metropolitan Bank & Trust Company	51.59%	58.94%	-7.35%	-12.48%
Union Bank of the Philippines	76.56%	87.48%	-10.92%	-12.48%
China Banking Corporation	44.11%	53.38%	-9.27%	-17.36%
Citibank N.A.	189.76%	252.77%	-63.02%	-24.93%
The Bank of Tokyo - Mitsubishi UFJ Ltd	2.52%	10.17%	-7.65%	-75.20%
JP Morgan Chase National Bank Association	6.89%	53.33%	-46.44%	-87.07%
Grand Total	69.97%	72.88%	2.91%	3.99%

Source: www.bsp.gov.ph

Philippine Universal and Commercial Banking System
Total Distressed Assets/ Total Capital Cushion
September 30, 2012 to December 31, 2012
In PhP
		December 31, 2012				September 30, 2012				Variance				% Variance
Bank	Total Distressed Assets (In PhP)	Total Capital Cushion (In PhP)	Distressed Assets/ Total Capital Cushion (In %)		Total Distressed Assets (In PhP)	Total Capital Cushion (In PhP)	Distressed Assets/ Total Capital Cushion (In %)		Total Distressed Assets (In PhP)	Total Capital Cushion (In PhP)	Distressed Assets/ Total Capital Cushion (In %)		Total Distressed Assets (In %)	Total Capital Cushion (In %)	Distressed Assets/ Total Capital Cushion (In %)
Philippine Bank of Communications	5,098,149,508.75	396,965,737.97	1284.28%		8,517,589,737.08	5,361,593,642.74	158.86%		-3,419,440,228.33	-4,964,627,904.77	1125.42%		-40.15%	-92.60%	708.42%
Bank of China Limited - Manila Branch	6,098,052,440.55	684,298,180.30	891.14%		5,499,250,349.88	674,694,698.46	815.07%		598,802,090.67	9,603,481.84	76.07%		10.89%	1.42%	9.33%
United Coconut Planters Bank	63,266,790,792.27	9,201,765,912.89	687.55%		57,684,765,438.46	8,345,167,762.71	691.24%		5,582,025,353.81	856,598,150.18	-3.69%		9.68%	10.26%	-0.53%
Deutsche Bank AG	3,279,741,854.26	1,465,660,409.12	223.77%		1,315,888,813.12	1,417,807,886.43	92.81%		1,963,853,041.14	47,852,522.69	130.96%		149.24%	3.38%	141.10%
Citibank N.A.	24,587,798,465.66	12,957,591,045.32	189.76%		32,833,020,831.09	12,989,088,119.39	252.77%		-8,245,222,365.43	-31,497,074.07	-63.02%		-25.11%	-0.24%	-24.93%
Standard Chartered Bank	5,281,945,731.70	2,834,198,027.55	186.36%		5,005,651,960.87	2,819,162,911.12	177.56%		276,293,770.83	15,035,116.43	8.81%		5.52%	0.53%	4.96%
Bank of Commerce	32,487,156,994.44	19,687,666,611.58	165.01%		32,651,852,421.91	19,825,006,462.21	164.70%		-164,695,427.47	-137,339,850.63	0.31%		-0.50%	-0.69%	0.19%
Philippine National Bank	50,766,564,105.82	36,454,637,515.91	139.26%		50,799,838,940.95	32,504,359,516.71	156.29%		-33,274,835.13	3,950,277,999.20	-17.03%		-0.07%	12.15%	-10.89%
Philippine Veterans Bank	8,261,265,793.78	6,643,455,486.88	124.35%		6,780,597,813.35	6,638,430,212.16	102.14%		1,480,667,980.43	5,025,274.72	22.21%		21.84%	0.08%	21.74%
Korea Exchange Bank	622,081,667.32	583,041,140.10	106.70%		659,493,409.58	595,807,841.52	110.69%		-37,411,742.26	-12,766,701.42	-3.99%		-5.67%	-2.14%	-3.61%
Mega International Commercial Bank Company Limited	716,835,863.00	809,226,402.15	88.58%		762,510,428.62	788,932,134.30	96.65%		-45,674,565.62	20,294,267.85	-8.07%		-5.99%	2.57%	-8.35%
Asia United Bank Corporation	9,466,569,125.56	11,557,038,013.51	81.91%		10,752,972,323.67	11,978,818,330.22	89.77%		-1,286,403,198.11	-421,780,316.71	-7.85%		-11.96%	-3.52%	-8.75%
Union Bank of the Philippines	40,003,600,777.57	52,249,323,368.83	76.56%		38,394,556,414.92	43,887,492,186.78	87.48%		1,609,044,362.65	8,361,831,182.05	-10.92%		4.19%	19.05%	-12.48%
HongKong & Shanghai Banking Corporation	4,175,703,914.79	5,524,361,185.42	75.59%		3,655,699,755.29	5,150,945,595.76	70.97%		520,004,159.50	373,415,589.66	4.62%		14.22%	7.25%	6.50%
Rizal Commercial Banking Corporation	26,931,182,478.09	36,272,524,028.31	74.25%		25,702,007,474.49	37,372,568,399.29	68.77%		1,229,175,003.60	-1,100,044,370.98	5.47%		4.78%	-2.94%	7.96%
East West Banking Corporation	12,241,660,915.00	17,697,163,565.41	69.17%		9,107,712,599.78	18,274,068,390.58	49.84%		3,133,948,315.22	-576,904,825.17	19.33%		34.41%	-3.16%	38.79%
Allied Banking Corporation	13,226,664,523.39	21,015,035,816.61	62.94%		13,279,854,327.12	20,618,612,108.27	64.41%		-53,189,803.73	396,423,708.34	-1.47%		-0.40%	1.92%	-2.28%
Maybank Philippines Inc.	3,418,141,480.22	5,833,302,969.32	58.60%		3,323,846,393.57	5,814,812,043.44	57.16%		94,295,086.65	18,490,925.88	1.44%		2.84%	0.32%	2.51%
ANZ Banking Group Ltd	1,387,062,003.08	2,483,140,793.85	55.86%		484,915,387.63	2,461,442,124.07	19.70%		902,146,615.45	21,698,669.78	36.16%		186.04%	0.88%	183.54%
Land Bank of the Philippines	27,526,269,033.71	51,456,405,333.75	53.49%		27,972,005,647.66	51,508,971,680.69	54.31%		-445,736,613.95	-52,566,346.94	-0.81%		-1.59%	-0.10%	-1.49%
Mizuho Corporate Bank Ltd. - Manila Branch	856,008,711.75	1,620,945,314.41	52.81%		584,697,791.26	1,626,550,127.94	35.95%		271,310,920.49	-5,604,813.53	16.86%		46.40%	-0.34%	46.91%
Metropolitan Bank & Trust Company	59,066,123,023.34	114,491,444,450.66	51.59%		58,589,388,144.26	99,399,052,866.07	58.94%		476,734,879.08	15,092,391,584.59	-7.35%		0.81%	15.18%	-12.48%
Development Bank of the Philippines	17,699,492,854.59	35,387,649,348.25	50.02%		16,706,116,367.70	35,686,157,877.06	46.81%		993,376,486.89	-298,508,528.81	3.20%		5.95%	-0.84%	6.84%
Philippine Trust Company	7,993,333,168.52	16,641,374,510.58	48.03%		8,158,501,407.67	16,613,937,357.88	49.11%		-165,168,239.15	27,437,152.70	-1.07%		-2.02%	0.17%	-2.19%
Bank of the Philippine Islands	46,085,756,663.14	98,659,354,960.12	46.71%		43,970,127,077.78	87,241,945,395.08	50.40%		2,115,629,585.36	11,417,409,565.04	-3.69%		4.81%	13.09%	-7.32%
Banco De Oro Unibank	76,233,226,086.74	164,200,302,494.77	46.43%		79,441,752,672.48	164,765,851,685.01	48.21%		-3,208,526,585.74	-565,549,190.24	-1.79%		-4.04%	-0.34%	-3.71%
China Banking Corporation	19,660,385,488.71	44,573,150,968.01	44.11%		21,113,412,180.64	39,555,560,128.40	53.38%		-1,453,026,691.93	5,017,590,839.61	-9.27%		-6.88%	12.68%	-17.36%
Robinsons Bank Corporation	2,272,055,418.39	5,643,568,553.73	40.26%		1,212,428,304.10	5,604,797,239.62	21.63%		1,059,627,114.29	38,771,314.11	18.63%		87.40%	0.69%	86.11%
Security Bank Corporation	8,472,633,153.76	31,614,925,250.60	26.80%		7,848,582,981.88	32,217,229,745.77	24.36%		624,050,171.88	-602,304,495.17	2.44%		7.95%	-1.87%	10.01%
Internationale Nederlanden Groep BK	669,970,501.45	2,682,900,657.30	24.97%		670,240,278.79	2,648,446,754.05	25.31%		-269,777.34	34,453,903.25	-0.34%		-0.04%	1.30%	-1.32%
Chinatrust (Philippines) Commercial Banking Corporation	1,241,753,004.91	6,330,948,365.80	19.61%		1,304,469,684.46	6,351,881,327.94	20.54%		-62,716,679.55	-20,932,962.14	-0.92%		-4.81%	-0.33%	-4.49%
Al-Amanah Islamic Bank of the Philippines	83,636,709.00	493,416,267.73	16.95%		85,395,047.44	456,309,084.47	18.71%		-1,758,338.44	37,107,183.26	-1.76%		-2.06%	8.13%	-9.42%
JP Morgan Chase National Bank Association	96,921,240.33	1,405,934,000.00	6.89%		745,416,697.32	1,397,724,000.00	53.33%		-648,495,456.99	8,210,000.00	-46.44%		-87.00%	0.59%	-87.07%
BDO Private Bank, Inc.	299,711,692.00	4,778,255,132.13	6.27%		167,156,062.49	4,778,546,612.60	3.50%		132,555,629.51	-291,480.47	2.77%		79.30%	-0.01%	79.31%
Bank of America N.A.	28,752,426.00	604,696,709.20	4.75%		23,912,893.44	603,846,709.20	3.96%		4,839,532.56	850,000.00	0.79%		20.24%	0.14%	20.07%
The Bank of Tokyo - Mitsubishi UFJ Ltd	57,456,069.37	2,278,505,311.02	2.52%		109,327,678.10	1,075,343,701.11	10.17%		-51,871,608.73	1,203,161,609.91	-7.65%		-47.45%	111.89%	-75.20%
Bangkok Bank Public Co. Ltd	28,978,615.90	1,219,794,847.00	2.38%		28,423,142.55	1,211,004,687.00	2.35%		555,473.35	8,790,160.00	0.03%		1.95%	0.73%	1.22%
Grand Total	579,689,432,296.86	828,433,968,686.09	69.97%		575,943,378,881.40	790,261,967,346.05	72.88%		3,746,053,415.46	38,172,001,340.04	2.91%		0.65%	4.83%	3.99%

Source: www.bsp.gov.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' Published Statements of Condition as of September 30, 2012 and December 31, 2012 as published in the BSP website (www.bsp.gov.ph). 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.