Philippine U/KBs stagnate in the first quarter of 2013

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 Universal and Commercial Banking Industry (from www.bsp.gov.ph), Total Distressed Assets of Philippine Universal and Commercial Banks increased by Php 68.367  billion or 11.79% from December 31, 2012 to March 31, 2013.  This increase was offset by a 11.59% 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 increased by a slight 0.42%, from 69.97% as of December 31, 2012 to 70.27% as of March 31, 2013. (Distressed banks are highlighted in yellow).

Those banks that posted significant improvements in this ratio include:

1. Philippine Bank of Communications (91.76% decrease)
2. Deutsche Bank AG (59.93% decrease)
3. Rizal Commercial Banking Corporation (35.29% decrease)
4. Maybank Philippines Inc. (31.31% decrease)
5. Philippine Trust Company (23.61% decrease)
6. United Coconut Planters Bank (23.05% decrease)
7. BDO Private Bank (22.74% decrease)
8. Security Bank Corporation (19.26% decrease)

The banks that exhibited significant deterioration in this ratio include:

1. Chinatrust (Philippines) Commercial Banking Corporation (131.15% increase)
2. The Bank of Tokyo - Mitsubishi UFJ Ltd (65.09% increase)
3. Citibank N.A. (60.45% increase)
4. ANZ Banking Group (55.06% increase)
5. Internationale Nederlanden Groep BK (35.45% increase)
6. HongKong & Shanghai Banking Corporation (34.38% increase)

Distressed Banks

Two 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 1st Qtr. of 2013.  These two banks ranked as distressed showed significant deterioration in their distressed ratios as of March 31, 2013.  These banks are:

1. Citibank N.A. (60.45% increase)
2. HongKong & Shanghai Banking Corporation (34.38% increase)

United Coconut Planters Bank now ranks as the most distressed domestic Universal and Commercial Bank in the country.  Its Total Distressed Assets are more than five times its Total Capital Cushion. It must be noted that this ratio is down sharply by 158.51% from 687.55% as of December 31, 2012 to 539.04% as of March 31, 2013. The second most distressed domestic Universal and Commercial Bank in the country is Bank of Commerce.  Its Total Distressed Assets are almost 1.73 times its Total Capital Cushion.

The list of Philippine banks classified as distressed as of March 31, 2013 are as follows:

1. Bank of China Limited - Manila Branch (Distressed Ratio of 908.15%)
2. United Coconut Planters Bank (Distressed Ratio of 529.04%)
3. Citibank N.A. (Distressed Ratio of 304.47%)
4. Standard Chartered Bank (Distressed Ratio of 205.32%)
5. Bank of Commerce (Distressed Ratio of 173.39%)
6. Philippine National Bank (Distressed Ratio of 121.65%)
7. Philippine Veterans Bank (Distressed Ratio of 121.53%)
8. Philippine Bank of Communications (Distressed Ratio of 105.85%)
9. HongKong & Shanghai Banking Corporation (Distressed Ratio of 106.70%)

Korea Exchange Bank, which had a Total Distressed Asset Ratio of 106.70% as of December 31, 2012 dropped out of the list of distressed banks, with a Total Distressed Asset Ratio of 95.44% as of March 31, 2013.

As a group the distressed banks showed some significant improvement in their Total Distressed Assets/Total Capital Cushion Ratios.  This ratio now stands at 181.08% as of March 31, 2013, down from 211.28% as of December 31, 2012.  For a list of Distressed Banks as of December 31, 2012, please check out a previous blog post: "Philippine U/KBs Improve in the 4th Qtr. of 2012".

Philippine Universal and Commercial Banking System
Total Distressed Assets/ Total Capital Cushion
December 31, 2012 to March 31, 2013
In %
Bank	March 31, 2013	December 31, 2012	Variance	% Variance
Chinatrust (Philippines) Commercial Banking Corporation	45.34%	19.61%	25.72%	131.15%
The Bank of Tokyo - Mitsubishi UFJ Ltd	4.16%	2.52%	1.64%	65.09%
Citibank N.A.	304.47%	189.76%	114.71%	60.45%
ANZ Banking Group Ltd	86.61%	55.86%	30.75%	55.06%
Internationale Nederlanden Groep BK	33.83%	24.97%	8.85%	35.45%
HongKong & Shanghai Banking Corporation	101.57%	75.59%	25.99%	34.38%
Mizuho Corporate Bank Ltd. - Manila Branch	60.19%	52.81%	7.39%	13.98%
Metropolitan Bank & Trust Company	57.86%	51.59%	6.27%	12.16%
Standard Chartered Bank	205.32%	186.36%	18.95%	10.17%
Bank of Commerce	173.39%	165.01%	8.38%	5.08%
Union Bank of the Philippines	80.28%	76.56%	3.71%	4.85%
Land Bank of the Philippines	55.46%	53.49%	1.97%	3.68%
Al-Amanah Islamic Bank of the Philippines	17.55%	16.95%	0.60%	3.52%
Asia United Bank Corporation	84.42%	81.91%	2.51%	3.06%
Bank of China Limited - Manila Branch	908.15%	891.14%	17.01%	1.91%
Bank of America N.A.	4.80%	4.75%	0.05%	1.05%
Bangkok Bank Public Co. Ltd	2.38%	2.38%	0.01%	0.35%
Philippine Veterans Bank	121.53%	124.35%	-2.82%	-2.27%
China Banking Corporation	41.80%	44.11%	-2.31%	-5.24%
JP Morgan Chase National Bank Association	6.52%	6.89%	-0.37%	-5.42%
Mega International Commercial Bank Company Limited	82.87%	88.58%	-5.71%	-6.44%
Banco De Oro Unibank	42.90%	46.43%	-3.53%	-7.60%
Bank of the Philippine Islands	42.87%	46.71%	-3.84%	-8.22%
Development Bank of the Philippines	45.76%	50.02%	-4.26%	-8.52%
Korea Exchange Bank	95.44%	106.70%	-11.26%	-10.55%
East West Banking Corporation	61.87%	69.17%	-7.31%	-10.56%
Philippine National Bank	121.65%	139.26%	-17.61%	-12.65%
Robinsons Bank Corporation	34.60%	40.26%	-5.66%	-14.06%
Security Bank Corporation	21.64%	26.80%	-5.16%	-19.26%
BDO Private Bank, Inc.	4.85%	6.27%	-1.43%	-22.74%
United Coconut Planters Bank	529.04%	687.55%	-158.51%	-23.05%
Philippine Trust Company	36.69%	48.03%	-11.34%	-23.61%
Maybank Philippines Inc.	40.25%	58.60%	-18.35%	-31.31%
Rizal Commercial Banking Corporation	48.05%	74.25%	-26.20%	-35.29%
Deutsche Bank AG	89.67%	223.77%	-134.10%	-59.93%
Philippine Bank of Communications	105.85%	1284.28%	-1178.43%	-91.76%
Allied Banking Corporation*	NA	62.94%	NA	NA
Grand Total	70.27%	69.97%	0.30%	0.42%

Philippine Universal and Commercial Banking System
Total Distressed Assets/ Total Capital Cushion
December 31, 2012 to March 31, 2013
In Php
		March 31, 2013				December 31, 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 Php)	Total Capital Cushion (In Php)	Distressed Assets/ Total Capital Cushion (In %)
Bank of China Limited - Manila Branch	6,226,566,132.27	685,633,584.43	908.15%		6,098,052,440.55	684,298,180.30	891.14%		128,513,691.72	1,335,404.13	17.01%		2.11%	0.20%	1.91%
United Coconut Planters Bank	63,212,402,369.73	11,948,563,753.86	529.04%		63,266,790,792.27	9,201,765,912.89	687.55%		-54,388,422.54	2,746,797,840.97	-158.51%		-0.09%	29.85%	-23.05%
Citibank N.A.	38,981,191,355.76	12,803,154,229.50	304.47%		24,587,798,465.66	12,957,591,045.32	189.76%		14,393,392,890.10	-154,436,815.82	114.71%		58.54%	-1.19%	60.45%
Standard Chartered Bank	5,808,076,301.57	2,828,803,541.61	205.32%		5,281,945,731.70	2,834,198,027.55	186.36%		526,130,569.87	-5,394,485.94	18.95%		9.96%	-0.19%	10.17%
Bank of Commerce	33,113,884,699.17	19,097,682,135.51	173.39%		32,487,156,994.44	19,687,666,611.58	165.01%		626,727,704.73	-589,984,476.07	8.38%		1.93%	-3.00%	5.08%
Philippine National Bank	101,650,751,378.64	83,561,759,995.75	121.65%		50,766,564,105.82	36,454,637,515.91	139.26%		50,884,187,272.82	47,107,122,479.84	-17.61%		100.23%	129.22%	-12.65%
Philippine Veterans Bank	8,509,862,413.39	7,002,089,593.69	121.53%		8,261,265,793.78	6,643,455,486.88	124.35%		248,596,619.61	358,634,106.81	-2.82%		3.01%	5.40%	-2.27%
Philippine Bank of Communications	5,127,180,667.39	4,843,878,337.23	105.85%		5,098,149,508.75	396,965,737.97	1284.28%		29,031,158.64	4,446,912,599.26	-1178.43%		0.57%	1120.23%	-91.76%
HongKong & Shanghai Banking Corporation	5,236,434,312.10	5,155,376,110.01	101.57%		4,175,703,914.79	5,524,361,185.42	75.59%		1,060,730,397.31	-368,985,075.41	25.99%		25.40%	-6.68%	34.38%
Korea Exchange Bank	547,963,102.12	574,154,130.72	95.44%		622,081,667.32	583,041,140.10	106.70%		-74,118,565.20	-8,887,009.38	-11.26%		-11.91%	-1.52%	-10.55%
Deutsche Bank AG	1,301,322,923.52	1,451,250,289.02	89.67%		3,279,741,854.26	1,465,660,409.12	223.77%		-1,978,418,930.74	-14,410,120.10	-134.10%		-60.32%	-0.98%	-59.93%
ANZ Banking Group Ltd	2,101,814,224.35	2,426,645,703.15	86.61%		1,387,062,003.08	2,483,140,793.85	55.86%		714,752,221.27	-56,495,090.70	30.75%		51.53%	-2.28%	55.06%
Asia United Bank Corporation	9,574,314,652.64	11,341,105,388.50	84.42%		9,466,569,125.56	11,557,038,013.51	81.91%		107,745,527.08	-215,932,625.01	2.51%		1.14%	-1.87%	3.06%
Mega International Commercial Bank Company Limited	668,192,835.94	806,269,723.00	82.87%		716,835,863.00	809,226,402.15	88.58%		-48,643,027.06	-2,956,679.15	-5.71%		-6.79%	-0.37%	-6.44%
Union Bank of the Philippines	42,296,512,583.07	52,688,551,721.95	80.28%		40,003,600,777.57	52,249,323,368.83	76.56%		2,292,911,805.50	439,228,353.12	3.71%		5.73%	0.84%	4.85%
East West Banking Corporation	12,414,495,873.39	20,066,410,961.86	61.87%		12,241,660,915.00	17,697,163,565.41	69.17%		172,834,958.39	2,369,247,396.45	-7.31%		1.41%	13.39%	-10.56%
Mizuho Corporate Bank Ltd. - Manila Branch	976,812,466.95	1,622,761,195.48	60.19%		856,008,711.75	1,620,945,314.41	52.81%		120,803,755.20	1,815,881.07	7.39%		14.11%	0.11%	13.98%
Metropolitan Bank & Trust Company	65,185,952,405.94	112,655,751,057.95	57.86%		59,066,123,023.34	114,491,444,450.66	51.59%		6,119,829,382.60	-1,835,693,392.71	6.27%		10.36%	-1.60%	12.16%
Land Bank of the Philippines	30,602,262,628.92	55,176,261,963.48	55.46%		27,526,269,033.71	51,456,405,333.75	53.49%		3,075,993,595.21	3,719,856,629.73	1.97%		11.17%	7.23%	3.68%
Rizal Commercial Banking Corporation	20,540,134,877.89	42,748,717,015.67	48.05%		26,931,182,478.09	36,272,524,028.31	74.25%		-6,391,047,600.20	6,476,192,987.36	-26.20%		-23.73%	17.85%	-35.29%
Development Bank of the Philippines	16,953,048,173.15	37,050,965,390.28	45.76%		17,699,492,854.59	35,387,649,348.25	50.02%		-746,444,681.44	1,663,316,042.03	-4.26%		-4.22%	4.70%	-8.52%
Chinatrust (Philippines) Commercial Banking Corporation	2,999,396,492.50	6,615,784,871.99	45.34%		1,241,753,004.91	6,330,948,365.80	19.61%		1,757,643,487.59	284,836,506.19	25.72%		141.55%	4.50%	131.15%
Banco De Oro Unibank	76,118,647,331.28	177,441,845,877.26	42.90%		76,233,226,086.74	164,200,302,494.77	46.43%		-114,578,755.46	13,241,543,382.49	-3.53%		-0.15%	8.06%	-7.60%
Bank of the Philippine Islands	43,644,138,071.24	101,796,874,232.99	42.87%		46,085,756,663.14	98,659,354,960.12	46.71%		-2,441,618,591.90	3,137,519,272.87	-3.84%		-5.30%	3.18%	-8.22%
China Banking Corporation	18,589,861,029.02	44,477,168,533.72	41.80%		19,660,385,488.71	44,573,150,968.01	44.11%		-1,070,524,459.69	-95,982,434.29	-2.31%		-5.45%	-0.22%	-5.24%
Maybank Philippines Inc.	3,654,345,354.05	9,079,475,717.27	40.25%		3,418,141,480.22	5,833,302,969.32	58.60%		236,203,873.83	3,246,172,747.95	-18.35%		6.91%	55.65%	-31.31%
Philippine Trust Company	6,745,136,340.64	18,382,183,736.20	36.69%		7,993,333,168.52	16,641,374,510.58	48.03%		-1,248,196,827.88	1,740,809,225.62	-11.34%		-15.62%	10.46%	-23.61%
Robinsons Bank Corporation	2,104,079,483.94	6,081,708,945.68	34.60%		2,272,055,418.39	5,643,568,553.73	40.26%		-167,975,934.45	438,140,391.95	-5.66%		-7.39%	7.76%	-14.06%
Internationale Nederlanden Groep BK	898,242,611.48	2,655,531,906.93	33.83%		669,970,501.45	2,682,900,657.30	24.97%		228,272,110.03	-27,368,750.37	8.85%		34.07%	-1.02%	35.45%
Security Bank Corporation	8,469,118,833.16	39,137,952,338.88	21.64%		8,472,633,153.76	31,614,925,250.60	26.80%		-3,514,320.60	7,523,027,088.28	-5.16%		-0.04%	23.80%	-19.26%
Al-Amanah Islamic Bank of the Philippines	78,110,484.90	445,124,546.72	17.55%		83,636,709.00	493,416,267.73	16.95%		-5,526,224.10	-48,291,721.01	0.60%		-6.61%	-9.79%	3.52%
JP Morgan Chase National Bank Association	91,228,292.89	1,399,233,600.00	6.52%		96,921,240.33	1,405,934,000.00	6.89%		-5,692,947.44	-6,700,400.00	-0.37%		-5.87%	-0.48%	-5.42%
BDO Private Bank, Inc.	254,937,650.87	5,260,407,527.13	4.85%		299,711,692.00	4,778,255,132.13	6.27%		-44,774,041.13	482,152,395.00	-1.43%		-14.94%	10.09%	-22.74%
Bank of America N.A.	29,150,755.92	606,696,709.20	4.80%		28,752,426.00	604,696,709.20	4.75%		398,329.92	2,000,000.00	0.05%		1.39%	0.33%	1.05%
The Bank of Tokyo - Mitsubishi UFJ Ltd	94,861,210.34	2,278,627,961.84	4.16%		57,456,069.37	2,278,505,311.02	2.52%		37,405,140.97	122,650.82	1.64%		65.10%	0.01%	65.09%
Bangkok Bank Public Co. Ltd	29,335,883.33	1,230,488,677.00	2.38%		28,978,615.90	1,219,794,847.00	2.38%		357,267.43	10,693,830.00	0.01%		1.23%	0.88%	0.35%
Allied Banking Corporation*	NA	NA	NA		13,226,664,523.39	21,015,035,816.61	62.94%		NA	NA	NA		NA	NA	NA
Grand Total	634,829,766,203.46	903,424,891,005.46	70.27%		579,689,432,296.86	828,433,968,686.09	69.97%		68,366,998,429.99	96,005,958,135.98	0.30%		11.79%	11.59%	0.42%
* Merged with Philippine National Bank

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 December 31, 2012 and March 31, 2013 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.