Is the Philippine Real Estate Bubble About to Burst?

In a previous blog post, we noted that Philippine House Prices have outpaced inflation by a wide margin.

Real Estate as a Store of Value:

In the Philippines, as is true in many other countries, real estate is often seen as a store of value, as a hedge against the relatively high inflation that characterizes so many emerging markets.  The investment options available and trustworthy to the general public tend to be few: government securities such as Treasury Bills, Bank Deposits, etc. As recently as 2012, less than 1% of the population own stocks because it is seen as too complex, or as investment vehicle only for the affluent, or a form of gambling. So to many Filipinos, the equity market is no place to be.

Negative Real Interest Rates

Unfortunately, the safest form of investing open to the general public, Philippine government securities, has been a money loser, inflation-wise, for the past several years.  Philippine Treasury Bill Yield Rates have continued their steady long-term decline to a point that they have barely hovered above zero in 2013.

Although yield rates have climbed in 2014, they do not compensate for the inflation underlying the economy.  As a result, real interest rates have been negative for almost four years running: from 2011 onwards.  Despite the recent rise in yields, real interest rates have dropped even further to a -2.68% as of July 2014.

The prolonged presence of negative real intest rates have increased the impetus to invest in real estate.  Construction as a percentage of GDP is the highest it has ever been since 1997 (the year the Asian Financial Crisis hit the Philippines).  Back in 1997, construction as a % of GDP was 11.14%.  As of the first semester of 2014, this ratio now stands at 11.20%, well above the historic average of 9.48%.

Construction Overhang

As a result, construction as a ratio of GDP has been well above this historic average of 9.48% since 2009.  The gains in construction spending have eaten away at the cumulative underhang or underinvestment in construction that has taken place since 2004, wherein the excessive spending that took place in the late 1990s was being absorbed.  As of now, in the first semester of 2014, the cumulative investment in construction of 0.4% is now at or slightly above equilibrium. But given the momentum of investment, construction investment is likely to surpass equilibrium in the coming years.

Real Estate Loans

The push into real estate is also reflected in Real Estate and Construction Loans.  Beginning sometime in 2010, Real Estate and Construction Loans as a % of Total Loan Portfolio broke out of its historic range of 12.5% to 17.0% from 1999 to 2010.  The percentage share of such loans peaked at 20.52% in September 2013 and has since dropped to just 18.65% as of June 2014.  Although the drop is significant, this ratio still has to drop even further to just reach the top end of its historic range.

Residential Real Estate and Commercial Real Estate Loans as a % of GDP have also begun to level off after climbing sharply since 2010.  Residential Real Estate Loans and Commercial Real Estate Loans now stand at 4.37% and 2.67% of GDP, respectively, as of March 2014.

As it stands, investment in construction and real estate have seem to reach equilibrium.  But the continued and prolonged presence of negative real interest rates will continue to drive investors to seek real estate as a store of value, a safe haven to protect their money against the vagaries of inflation.  The recent jump in Treasury Bill rates may dampen this enthusiasm for real estate but rates have to climb further for such market euphoria to disappear.

Singapore, Malaysia, and Thailand Post Flat to Declining Housing Prices, Can the Philippines and Indonesia be Not Far Behind? - 1st Qtr 2014

Almost all countries discussed in this blog post, with the exception of Thailand, have been experiencing rapid growth in home prices that have outstripped inflation by a wide margin.  The gap between home prices and their inflation adjusted levels are at the widest ever, particularly in Singapore and the Philippines. 

Singapore

Singapore's home prices slid for a second straight quarter, which, according to Bloomberg, is the longest losing streak in five years.  Home prices are still  84% above their year end 2004 levels.


Malaysia

Neighboring Malaysia's House Price Index actually topped out at 135.44% in the second quarter of 2011 and has posted a 3.37% decline since then to 130.87% as of the fourth quarter of 2013.  In the first quarter of 2014, home prices rebounded to 133.03%, reducing the decline from the peak to just 1.78%.  Home prices are just 33.03% above their year end 2004 levels.


Thailand

In Thailand, which has been experiencing political turmoil for some time, home prices have remained essentially flat since the end of 2004. Home Prices ended 2013 with the index at 100.54%, just 054% higher than the end of 2004, but showing a substantial recovery since the recent low of 74.08% posted in the third quarter of 2009. In the first quarter of 2014, home prices have rebounded to 102.13%, or 2.13% higher than its year-end 2004 levels, way below its expected inflation adjusted levels.

Indonesia

Meanwhile in Indonesia, home prices have showed no signs of slowing down their upward trajectory.  In fact, prices seem to have gone parabolic, climbing 4.63% in the last quarter of 2013, from a base of 121.49% as of the third quarter of 2013 to 127.11% as of year end 2013.  In the first quarter of 2014, home prices have climbed an additional 2.56% to reach 130.36%.  Since the first quarter of 2007, home prices have risen 30.36%. Indonesian Home Prices, like Thailand, have lagged inflation since 2007.

Philippines

Philippine house price index stands at 199.50% at the end of the first quarter 2014 or almost 100.00% above their year-end 2004 levels.  Philippine home prices have posted the largest 10 year gains among all the countries considered in this blog post.  Like Indonesia, home prices have so far no signs of slowing down their upward trajectory for the foreseeable future.   The question is, is this momentum sustainable?  Or will the Philippines and Indonesia follow its ASEAN neighbors, Singapore, Malaysia, and Thailand, in exhibiting plateauing or declining house prices?  That remains to be seen.

An 80% Minimum NPL Coverage Ratio will Result in a Severe Undercapitalization of Some Philippine Banks - March 31, 2014

In a previous blog post called "Are Philippine Banks Under Provisioning Loan Losses? - As of March 31, 2013", we discussed the current aggregate Loan Loss Reserves (LLR) as a percentage of Total Loan Portfolio (TLP), which stood at 3.10% as of March 31, 2014, is below the historic average of 4.32% for the last thirty years.  Despite NPLs being at or near historic lows, some banks still have not adequately provisioned for loan losses.  Their NPL Coverage Ratios are below the ideal ratio of 100% and even below the suggested minimum of 80% NPL Coverage Ratio.

As the table below suggests, it seems that around 48 banks (highlighted in yellow) fall into this deficiency.

Philippine Banking System
NPL Coverage Ratio
March 31, 2014
Bank	Loan Loss Provisions	Gross NPLs	NPL Coverage Ratio
PRODUCERS SAVINGS BANK CORPORATION	62,993,638.40	322,246,331.41	19.55%
PHILIPPINE RESOURCES SAVINGS BANKING	212,441,553.87	935,376,928.06	22.71%
THE REAL BANK (A THRIFT BANK) INC	656,788,213.44	2,665,857,090.78	24.64%
PROGRESS SAVINGS AND LOAN BANK INC	309,923.60	1,247,829.54	24.84%
OPPORTUNITY KAUSWAGAN BANK INC (A MICROFINANCE	19,545,709.08	73,280,074.41	26.67%
MALASIQUI PROGRESSIVE SLB, INC	6,470,762.05	23,758,506.25	27.24%
EQUICOM SAVINGS BANK INC	78,171,347.82	285,604,477.12	27.37%
LIFE SAVINGS BANK INC	2,649,806.08	9,499,865.50	27.89%
DUNGGANON BANK (A MICROFINANCE THRIFT	9,922,919.00	34,773,345.24	28.54%
METRO CEBU PUBLIC SAVINGS BANK	5,223,157.51	17,551,596.78	29.76%
QUEZON COCONUT BANK INC (A THRIFT BANK)	930,212.75	3,073,050.56	30.27%
COMSAVINGS BANK	60,506,624.39	191,305,787.91	31.63%
NORTHPOINT DEV'T BANK INC	16,405,983.73	50,239,956.29	32.66%
WEALTH DEVELOPMENT BANK CORPORATION	64,853,212.07	195,898,098.57	33.11%
CENTURY SAVINGS BANK CORPORATION	12,646,730.90	37,181,786.96	34.01%
QUEEN CITY DEVELOPMENT BANK INC OR QUEENBANK	15,538,217.16	45,631,012.38	34.05%
PACIFIC ACE SAVINGS BANK INC	2,829,328.72	8,033,232.49	35.22%
PLANTERS DEVELOPMENT BANK	1,315,210,918.76	3,573,216,336.81	36.81%
LUZON DEVELOPMENT BANK	76,211,555.66	188,268,285.57	40.48%
DUMAGUETE CITY DEV BANK INC	17,300,528.04	41,571,909.87	41.62%
MARITIME SAVINGS BANK CORPORATION	7,074,281.24	16,625,205.32	42.55%
ALLIED SAVINGS BANK	185,955,059.14	436,778,077.39	42.57%
PAMPANGA DEVELOPMENT BANK	17,325,061.24	40,645,528.06	42.62%
CITYSTATE SAVINGS BANK INC	50,682,977.13	118,808,414.32	42.66%
BUSINESS AND CONSUMERS BANK (A DB)	7,130,940.77	15,928,824.09	44.77%
LEMERY SAVINGS & LOAN BANK, INC.	5,008,824.64	10,377,162.11	48.27%
CHINA BANK SAVINGS INC	225,492,939.65	463,950,396.70	48.60%
LEGAZPI SAVINGS BANK INC	152,736,227.42	298,280,428.39	51.21%
MICROFINANCE MAXIMUM SB INC	1,434,011.34	2,711,378.39	52.89%
BANK ONE SAVINGS AND TRUST CORP.	8,261,602.53	15,304,127.53	53.98%
PENBANK INC (A PDB) (FORMERLY: PENINSULA	48,608,159.37	88,363,646.80	55.01%
FARMERS SAVINGS & LOAN BANK INC	24,218,286.37	41,176,509.30	58.82%
STERLING BANK OF ASIA INC (A SAVINGS	528,217,652.34	804,918,619.51	65.62%
WORLD PARTNERS BANK (A THRIFT BANK)	67,792,897.28	102,728,095.15	65.99%
RCBC SAVINGS BANK INC	1,333,628,847.92	1,996,786,055.85	66.79%
HIYAS BANKING CORPORATION	12,588,045.27	18,816,080.51	66.90%
EAST WEST BANKING CORP	3,116,330,203.78	4,598,059,488.49	67.77%
MAYBANK PHILIPPINES INC	876,734,789.30	1,282,710,033.55	68.35%
PRIDE STAR DEVELOPMENT BANK INC	6,090,315.48	8,882,515.92	68.57%
TONGYANG SAVINGS BANK INC	98,611,405.84	140,394,529.05	70.24%
BATAAN DEVELOPMENT BANK	15,592,398.15	21,736,980.10	71.73%
BPI GLOBE BANKO INC A SAVINGS BANK	189,492,130.37	258,776,399.64	73.23%
TOWER DEVELOPMENT BANK	8,420,489.56	11,363,447.67	74.10%
BATAAN SAVINGS AND LOAN BANK	2,137,583.98	2,838,338.85	75.31%
UNITED COCONUT PLANTERS BANK	4,310,199,030.53	5,711,874,624.13	75.46%
KOREA EXCHANGE BANK	121,587,117.18	158,745,180.26	76.59%
1ST VALLEY BANK INC A DEVELOPMENT BANK	176,196,944.07	227,611,007.05	77.41%
SAMPAGUITA SAVINGS BANK INC	21,561,538.64	27,028,077.39	79.77%
VILLAGE BANK INC (A THRIFT BANK)	17,342,200.42	21,639,438.67	80.14%
MALAYAN BANK SAVINGS AND MORT BANK INC	176,965,866.26	218,312,032.21	81.06%
THE PALAWAN BANK (PALAWAN DB) INC	11,645,752.16	14,071,641.06	82.76%
UNIVERSITY SAVINGS BANK INC	41,066,844.80	48,282,166.46	85.06%
STANDARD CHARTERED BANK	1,339,429,791.93	1,572,054,950.49	85.20%
ENTERPRISE BANK INC (A THRIFT BANK)	45,072,038.57	52,061,188.50	86.58%
PHIL POSTAL SAVINGS BANK INC	346,062,955.34	387,713,709.40	89.26%
PHILIPPINE BUSINESS BANK INC A SAVINGS	706,501,501.15	786,384,293.47	89.84%
BPI FAMILY SAVINGS BANK INC	4,211,946,971.24	4,654,699,353.00	90.49%
FIRST CONSOLIDATED BANK INC (A PDB)	435,179,565.24	471,778,749.04	92.24%
PHIL NATIONAL BANK	9,590,241,198.85	10,323,540,398.06	92.90%
PHIL BANK OF COMMUNICATIONS	1,298,732,232.42	1,369,863,596.82	94.81%
DEVELOPMENT BANK OF THE PHIL	5,715,894,730.19	5,952,217,939.24	96.03%
ROBINSONS BANK CORPORATION	439,347,712.86	450,161,983.95	97.60%
BANK OF COMMERCE	3,108,071,210.14	3,140,730,913.06	98.96%
INTER-ASIA DEVELOPMENT BANK	5,749,165.66	5,766,081.97	99.71%
HONGKONG & SHANGHAI BANKING CORP	1,188,727,905.84	1,186,140,410.67	100.22%
UNITED OVERSEAS BANK PHILIPPINES	667,735,102.81	665,448,276.65	100.34%
SECURITY BANK SAVINGS CORPORATION	638,145,183.42	603,956,346.71	105.66%
ASIA UNITED BANK CORPORATION	1,144,070,390.43	1,067,876,024.36	107.14%
PHILIPPINE VETERANS BANK	1,076,688,778.04	953,671,205.86	112.90%
RIZAL COMM'L BANKING CORP	3,561,804,559.33	3,128,741,619.03	113.84%
SUN SAVINGS BANK INC	7,995,615.69	6,955,500.63	114.95%
CORDILLERA SAVINGS BANK INC	17,486,628.42	15,135,180.92	115.54%
UNION BANK OF THE PHILS	10,735,837,873.52	9,264,016,489.58	115.89%
PHIL SAVINGS BANK	4,466,521,734.22	3,852,498,544.36	115.94%
UCPB SAVINGS BANK	412,117,873.82	353,568,135.78	116.56%
CTBC BANK (PHILIPPINES) CORP	457,401,405.13	376,072,936.98	121.63%
HSBC SAVINGS BANK(PHILS) INC	100,295,645.53	74,113,078.25	135.33%
MERCHANTS SAVINGS & LOAN ASSN INC	5,149,261.10	3,649,479.97	141.10%
LAND BANK OF THE PHILIPPINES	11,864,985,279.25	7,718,631,312.24	153.72%
BANK OF THE PHIL ISLANDS	11,724,931,399.54	7,313,979,407.47	160.31%
BDO UNIBANK INC	27,958,729,248.94	17,110,528,484.20	163.40%
CHINA BANKING CORP	6,743,511,736.83	4,085,461,652.86	165.06%
CARD SME BANK INC A THRIFT BANK	36,422,500.47	21,670,955.37	168.07%
PHIL TRUST COMPANY	1,992,376,839.36	1,146,303,968.20	173.81%
BPI DIRECT SAVINGS BANK INC	185,278,822.46	92,818,624.06	199.61%
OPTIMUM DEVELOPMENT BANK INC	44,626,617.39	18,286,790.21	244.04%
SECURITY BANK CORP	2,452,549,980.38	958,577,062.77	255.85%
AL-AMANAH ISLAMIC INVESTMENT BANK OF THE PHILS	3,147,733.68	1,092,048.97	288.24%
METROPOLITAN BANK & TCO	11,572,102,150.64	3,280,149,921.17	352.79%
CITIBANK, N.A.	7,628,556,408.94	1,337,572,880.61	570.33%
BANK OF CHINA LIMITED-MANILA BRANCH	69,701,614.59	8,660,895.91	804.79%
ANZ BANKING GROUP LTD	259,724,705.59	23,339,114.85	1112.83%
JP MORGAN CHASE BANK NATIONAL ASSN.	20,313,705.00	734,885.22	2764.20%
BANGKOK BANK PUBLIC CO LTD	160,619,067.50	4,914,155.55	3268.50%
INTERNATIONALE NEDERLANDEN GROEP BK	73,974,214.82	91.63	80731436.01%
BANK OF AMERICA N.A.	10,250,004.00	4.00	256250100.00%
BDO ELITE SAVINGS BANK INC	0.00	0.00	NA
BDO PRIVATE BANK, INC.	79,530,838.02	0.00	NA
CITIBANK SAVINGS INC	0.00	0.00	NA
CITY SAVINGS BANK	0.00	0.00	NA
DEUTSCHE BANK AG	178,284,263.40	0.00	NA
ISLA BANK(A THRIFT BANK) INC	4,004,580.33	0.00	NA
MEGA INT'L COMM'L BANK CO LTD	219,352,501.10	0.00	NA
MIZUHO BANK LTD - MANILA BRANCH	329,971,183.27	0.00	NA
THE BNK OF TOKYO-MITSUBISHI UFJ LTD	366,210,030.46	0.00	NA
Grand Total	150,204,443,224.05	119,769,678,594.46	125.41%

Raising the NPL Coverage Ratio to a minimum of 80% will entail additional loan loss provisions for some banks that could eat into a substantial chunk (20% or more) of their Stockholder's Equity.  Based on the table below, around 10 banks will be severely affected:

Philippine Banking System
Impact on SE of Minimum Loan Loss Provisions
March 31, 2014
Bank	Gross NPLs	Minimum Loan Loss Provisions at 80% NPL Coverage Ratio	Actual Loan Loss Provisions	Excess/Deficit Loan Loss Provisions	Stockholder's Equity	Impact on SE
THE REAL BANK (A THRIFT BANK) INC	2,665,857,090.78	2,132,685,672.62	656,788,213.44	-1,475,897,459.18	623,169,811.49	-236.84%
PLANTERS DEVELOPMENT BANK	3,573,216,336.81	2,858,573,069.45	1,315,210,918.76	-1,543,362,150.69	2,962,516,124.60	-52.10%
COMSAVINGS BANK	191,305,787.91	153,044,630.33	60,506,624.39	-92,538,005.94	182,352,184.78	-50.75%
OPPORTUNITY KAUSWAGAN BANK INC (A MICROFINANCE	73,280,074.41	58,624,059.53	19,545,709.08	-39,078,350.45	102,749,325.53	-38.03%
NORTHPOINT DEV'T BANK INC	50,239,956.29	40,191,965.03	16,405,983.73	-23,785,981.30	64,659,809.94	-36.79%
PHILIPPINE RESOURCES SAVINGS BANKING	935,376,928.06	748,301,542.45	212,441,553.87	-535,859,988.58	1,662,827,636.60	-32.23%
EQUICOM SAVINGS BANK INC	285,604,477.12	228,483,581.70	78,171,347.82	-150,312,233.88	553,343,969.61	-27.16%
LEGAZPI SAVINGS BANK INC	298,280,428.39	238,624,342.71	152,736,227.42	-85,888,115.29	337,575,540.91	-25.44%
WEALTH DEVELOPMENT BANK CORPORATION	195,898,098.57	156,718,478.86	64,853,212.07	-91,865,266.79	373,531,565.95	-24.59%
MALASIQUI PROGRESSIVE SLB, INC	23,758,506.25	19,006,805.00	6,470,762.05	-12,536,042.95	54,677,057.82	-22.93%
DUNGGANON BANK (A MICROFINANCE THRIFT	34,773,345.24	27,818,676.19	9,922,919.00	-17,895,757.19	90,348,361.85	-19.81%
WORLD PARTNERS BANK (A THRIFT BANK)	102,728,095.15	82,182,476.12	67,792,897.28	-14,389,578.84	80,585,454.05	-17.86%
ALLIED SAVINGS BANK	436,778,077.39	349,422,461.91	185,955,059.14	-163,467,402.77	963,266,165.32	-16.97%
PRODUCERS SAVINGS BANK CORPORATION	322,246,331.41	257,797,065.13	62,993,638.40	-194,803,426.73	1,215,363,319.51	-16.03%
LUZON DEVELOPMENT BANK	188,268,285.57	150,614,628.46	76,211,555.66	-74,403,072.80	494,724,410.20	-15.04%
METRO CEBU PUBLIC SAVINGS BANK	17,551,596.78	14,041,277.42	5,223,157.51	-8,818,119.91	64,050,550.49	-13.77%
PAMPANGA DEVELOPMENT BANK	40,645,528.06	32,516,422.45	17,325,061.24	-15,191,361.21	118,955,453.11	-12.77%
BPI GLOBE BANKO INC A SAVINGS BANK	258,776,399.64	207,021,119.71	189,492,130.37	-17,528,989.34	152,910,249.12	-11.46%
MARITIME SAVINGS BANK CORPORATION	16,625,205.32	13,300,164.26	7,074,281.24	-6,225,883.02	62,296,104.59	-9.99%
PENBANK INC (A PDB) (FORMERLY: PENINSULA	88,363,646.80	70,690,917.44	48,608,159.37	-22,082,758.07	249,183,698.85	-8.86%
CHINA BANK SAVINGS INC	463,950,396.70	371,160,317.36	225,492,939.65	-145,667,377.71	1,680,952,906.29	-8.67%
FARMERS SAVINGS & LOAN BANK INC	41,176,509.30	32,941,207.44	24,218,286.37	-8,722,921.07	116,414,913.18	-7.49%
DUMAGUETE CITY DEV BANK INC	41,571,909.87	33,257,527.90	17,300,528.04	-15,956,999.86	213,345,382.52	-7.48%
STERLING BANK OF ASIA INC (A SAVINGS	804,918,619.51	643,934,895.61	528,217,652.34	-115,717,243.27	1,550,771,793.07	-7.46%
LIFE SAVINGS BANK INC	9,499,865.50	7,599,892.40	2,649,806.08	-4,950,086.32	67,757,354.91	-7.31%
BUSINESS AND CONSUMERS BANK (A DB)	15,928,824.09	12,743,059.27	7,130,940.77	-5,612,118.50	82,328,718.85	-6.82%
CITYSTATE SAVINGS BANK INC	118,808,414.32	95,046,731.46	50,682,977.13	-44,363,754.33	734,307,159.32	-6.04%
PACIFIC ACE SAVINGS BANK INC	8,033,232.49	6,426,585.99	2,829,328.72	-3,597,257.27	76,986,659.97	-4.67%
LEMERY SAVINGS & LOAN BANK, INC.	10,377,162.11	8,301,729.69	5,008,824.64	-3,292,905.05	72,217,211.14	-4.56%
RCBC SAVINGS BANK INC	1,996,786,055.85	1,597,428,844.68	1,333,628,847.92	-263,799,996.76	6,452,786,425.53	-4.09%
TONGYANG SAVINGS BANK INC	140,394,529.05	112,315,623.24	98,611,405.84	-13,704,217.40	388,809,256.43	-3.52%
QUEEN CITY DEVELOPMENT BANK INC OR QUEENBANK	45,631,012.38	36,504,809.90	15,538,217.16	-20,966,592.74	659,366,771.59	-3.18%
EAST WEST BANKING CORP	4,598,059,488.49	3,678,447,590.79	3,116,330,203.78	-562,117,387.01	19,488,602,756.57	-2.88%
BATAAN DEVELOPMENT BANK	21,736,980.10	17,389,584.08	15,592,398.15	-1,797,185.93	68,019,741.89	-2.64%
QUEZON COCONUT BANK INC (A THRIFT BANK)	3,073,050.56	2,458,440.45	930,212.75	-1,528,227.70	58,691,004.89	-2.60%
MICROFINANCE MAXIMUM SB INC	2,711,378.39	2,169,102.71	1,434,011.34	-735,091.37	38,321,311.19	-1.92%
CENTURY SAVINGS BANK CORPORATION	37,181,786.96	29,745,429.57	12,646,730.90	-17,098,698.67	916,937,801.45	-1.86%
HIYAS BANKING CORPORATION	18,816,080.51	15,052,864.41	12,588,045.27	-2,464,819.14	161,399,880.28	-1.53%
MAYBANK PHILIPPINES INC	1,282,710,033.55	1,026,168,026.84	876,734,789.30	-149,433,237.54	10,384,055,196.64	-1.44%
PRIDE STAR DEVELOPMENT BANK INC	8,882,515.92	7,106,012.74	6,090,315.48	-1,015,697.26	74,725,625.76	-1.36%
UNITED COCONUT PLANTERS BANK	5,711,874,624.13	4,569,499,699.30	4,310,199,030.53	-259,300,668.77	19,877,073,858.92	-1.30%
KOREA EXCHANGE BANK	158,745,180.26	126,996,144.21	121,587,117.18	-5,409,027.03	480,909,788.62	-1.12%
PROGRESS SAVINGS AND LOAN BANK INC	1,247,829.54	998,263.63	309,923.60	-688,340.03	82,292,284.97	-0.84%
BANK ONE SAVINGS AND TRUST CORP.	15,304,127.53	12,243,302.02	8,261,602.53	-3,981,699.49	544,534,902.56	-0.73%
TOWER DEVELOPMENT BANK	11,363,447.67	9,090,758.14	8,420,489.56	-670,268.58	114,419,099.22	-0.59%
1ST VALLEY BANK INC A DEVELOPMENT BANK	227,611,007.05	182,088,805.64	176,196,944.07	-5,891,861.57	1,073,900,287.47	-0.55%
BATAAN SAVINGS AND LOAN BANK	2,838,338.85	2,270,671.08	2,137,583.98	-133,087.10	72,157,228.01	-0.18%
SAMPAGUITA SAVINGS BANK INC	27,028,077.39	21,622,461.91	21,561,538.64	-60,923.27	57,672,342.21	-0.11%
BDO ELITE SAVINGS BANK INC	0.00	0.00	0.00	0.00	807,091,446.79	0.00%
CITIBANK SAVINGS INC	0.00	0.00	0.00	0.00	971,883,844.42	0.00%
VILLAGE BANK INC (A THRIFT BANK)	21,639,438.67	17,311,550.94	17,342,200.42	30,649.48	77,175,718.91	0.04%
MALAYAN BANK SAVINGS AND MORT BANK INC	218,312,032.21	174,649,625.77	176,965,866.26	2,316,240.49	1,054,678,882.87	0.22%
MERCHANTS SAVINGS & LOAN ASSN INC	3,649,479.97	2,919,583.98	5,149,261.10	2,229,677.12	471,236,692.40	0.47%
AL-AMANAH ISLAMIC INVESTMENT BANK OF THE PHILS	1,092,048.97	873,639.18	3,147,733.68	2,274,094.50	381,793,454.58	0.60%
ISLA BANK(A THRIFT BANK) INC	0.00	0.00	4,004,580.33	4,004,580.33	649,558,600.52	0.62%
PHILIPPINE BUSINESS BANK INC A SAVINGS	786,384,293.47	629,107,434.78	706,501,501.15	77,394,066.37	7,358,693,887.87	1.05%
UNIVERSITY SAVINGS BANK INC	48,282,166.46	38,625,733.17	41,066,844.80	2,441,111.63	219,269,486.25	1.11%
JP MORGAN CHASE BANK NATIONAL ASSN.	734,885.22	587,908.18	20,313,705.00	19,725,796.82	1,415,521,783.62	1.39%
THE PALAWAN BANK (PALAWAN DB) INC	14,071,641.06	11,257,312.85	11,645,752.16	388,439.31	27,795,358.05	1.40%
BDO PRIVATE BANK, INC.	0.00	0.00	79,530,838.02	79,530,838.02	5,435,347,034.96	1.46%
ROBINSONS BANK CORPORATION	450,161,983.95	360,129,587.16	439,347,712.86	79,218,125.70	5,239,101,313.23	1.51%
ENTERPRISE BANK INC (A THRIFT BANK)	52,061,188.50	41,648,950.80	45,072,038.57	3,423,087.77	219,921,441.20	1.56%
ASIA UNITED BANK CORPORATION	1,067,876,024.36	854,300,819.49	1,144,070,390.43	289,769,570.94	18,505,614,444.76	1.57%
HSBC SAVINGS BANK(PHILS) INC	74,113,078.25	59,290,462.60	100,295,645.53	41,005,182.93	2,578,035,862.71	1.59%
PHIL NATIONAL BANK	10,323,540,398.06	8,258,832,318.45	9,590,241,198.85	1,331,408,880.40	78,098,746,199.06	1.70%
BANK OF AMERICA N.A.	4.00	3.20	10,250,004.00	10,250,000.80	596,946,705.20	1.72%
INTER-ASIA DEVELOPMENT BANK	5,766,081.97	4,612,865.58	5,749,165.66	1,136,300.08	52,501,490.26	2.16%
FIRST CONSOLIDATED BANK INC (A PDB)	471,778,749.04	377,422,999.23	435,179,565.24	57,756,566.01	2,618,040,856.36	2.21%
SUN SAVINGS BANK INC	6,955,500.63	5,564,400.50	7,995,615.69	2,431,215.19	104,537,929.83	2.33%
RIZAL COMM'L BANKING CORP	3,128,741,619.03	2,502,993,295.22	3,561,804,559.33	1,058,811,264.11	45,331,529,316.16	2.34%
DEVELOPMENT BANK OF THE PHIL	5,952,217,939.24	4,761,774,351.39	5,715,894,730.19	954,120,378.80	40,094,459,800.95	2.38%
CTBC BANK (PHILIPPINES) CORP	376,072,936.98	300,858,349.58	457,401,405.13	156,543,055.55	6,392,598,403.91	2.45%
BPI FAMILY SAVINGS BANK INC	4,654,699,353.00	3,723,759,482.40	4,211,946,971.24	488,187,488.84	18,563,852,659.29	2.63%
INTERNATIONALE NEDERLANDEN GROEP BK	91.63	73.30	73,974,214.82	73,974,141.52	2,532,701,534.05	2.92%
HONGKONG & SHANGHAI BANKING CORP	1,186,140,410.67	948,912,328.54	1,188,727,905.84	239,815,577.30	6,101,749,058.38	3.93%
SECURITY BANK CORP	958,577,062.77	766,861,650.22	2,452,549,980.38	1,685,688,330.16	42,016,799,127.69	4.01%
OPTIMUM DEVELOPMENT BANK INC	18,286,790.21	14,629,432.17	44,626,617.39	29,997,185.22	713,672,445.02	4.20%
BANK OF COMMERCE	3,140,730,913.06	2,512,584,730.45	3,108,071,210.14	595,486,479.69	13,184,273,245.48	4.52%
PHIL POSTAL SAVINGS BANK INC	387,713,709.40	310,170,967.52	346,062,955.34	35,891,987.82	792,374,957.78	4.53%
PHIL BANK OF COMMUNICATIONS	1,369,863,596.82	1,095,890,877.46	1,298,732,232.42	202,841,354.96	4,472,824,414.17	4.53%
BANK OF THE PHIL ISLANDS	7,313,979,407.47	5,851,183,525.98	11,724,931,399.54	5,873,747,873.56	126,212,538,457.67	4.65%
UCPB SAVINGS BANK	353,568,135.78	282,854,508.62	412,117,873.82	129,263,365.20	2,730,465,559.23	4.73%
STANDARD CHARTERED BANK	1,572,054,950.49	1,257,643,960.39	1,339,429,791.93	81,785,831.54	1,666,384,056.91	4.91%
PHIL TRUST COMPANY	1,146,303,968.20	917,043,174.56	1,992,376,839.36	1,075,333,664.80	21,083,481,851.29	5.10%
CORDILLERA SAVINGS BANK INC	15,135,180.92	12,108,144.74	17,486,628.42	5,378,483.68	101,920,877.44	5.28%
PHILIPPINE VETERANS BANK	953,671,205.86	762,936,964.69	1,076,688,778.04	313,751,813.35	5,840,262,371.45	5.37%
CARD SME BANK INC A THRIFT BANK	21,670,955.37	17,336,764.30	36,422,500.47	19,085,736.17	291,104,890.74	6.56%
METROPOLITAN BANK & TCO	3,280,149,921.17	2,624,119,936.94	11,572,102,150.64	8,947,982,213.70	130,598,953,354.14	6.85%
ANZ BANKING GROUP LTD	23,339,114.85	18,671,291.88	259,724,705.59	241,053,413.71	3,302,947,026.06	7.30%
BANK OF CHINA LIMITED-MANILA BRANCH	8,660,895.91	6,928,716.73	69,701,614.59	62,772,897.86	797,420,382.03	7.87%
THE BNK OF TOKYO-MITSUBISHI UFJ LTD	0.00	0.00	366,210,030.46	366,210,030.46	4,581,085,136.29	7.99%
CHINA BANKING CORP	4,085,461,652.86	3,268,369,322.29	6,743,511,736.83	3,475,142,414.54	41,863,129,705.04	8.30%
UNION BANK OF THE PHILS	9,264,016,489.58	7,411,213,191.66	10,735,837,873.52	3,324,624,681.86	39,604,317,566.75	8.39%
LAND BANK OF THE PHILIPPINES	7,718,631,312.24	6,174,905,049.79	11,864,985,279.25	5,690,080,229.46	67,638,813,297.23	8.41%
BDO UNIBANK INC	17,110,528,484.20	13,688,422,787.36	27,958,729,248.94	14,270,306,461.58	165,466,057,134.09	8.62%
PHIL SAVINGS BANK	3,852,498,544.36	3,081,998,835.49	4,466,521,734.22	1,384,522,898.73	15,229,885,315.52	9.09%
BPI DIRECT SAVINGS BANK INC	92,818,624.06	74,254,899.25	185,278,822.46	111,023,923.21	1,038,535,786.97	10.69%
UNITED OVERSEAS BANK PHILIPPINES	665,448,276.65	532,358,621.32	667,735,102.81	135,376,481.49	1,264,480,366.89	10.71%
DEUTSCHE BANK AG	0.00	0.00	178,284,263.40	178,284,263.40	1,577,747,405.91	11.30%
MEGA INT'L COMM'L BANK CO LTD	0.00	0.00	219,352,501.10	219,352,501.10	1,878,799,338.87	11.68%
MIZUHO BANK LTD - MANILA BRANCH	0.00	0.00	329,971,183.27	329,971,183.27	2,724,745,253.27	12.11%
BANGKOK BANK PUBLIC CO LTD	4,914,155.55	3,931,324.44	160,619,067.50	156,687,743.06	1,121,635,525.23	13.97%
SECURITY BANK SAVINGS CORPORATION	603,956,346.71	483,165,077.37	638,145,183.42	154,980,106.05	987,411,819.09	15.70%
CITIBANK, N.A.	1,337,572,880.61	1,070,058,304.49	7,628,556,408.94	6,558,498,104.45	7,568,976,199.15	86.65%
CITY SAVINGS BANK	NA	NA	NA	NA	NA	NA
Grand Total	119,769,678,594.46	95,815,742,875.57	150,204,443,224.05	54,388,700,348.48	1,028,250,270,531.76	5.29%

Out of the 10 banks highlighted in yellow, 4 banks have been regularly listed as one of the"The Top Distressed Philippine Banks as of March 31, 2014".

Planters Development Bank faces a shortfall of 52.10% of its stated stockholders equity of Php 2.963 billion if it were to increase its loan loss provisions to meet a minimum NPL Coverage Ratio of 80%.  Planters nearly failed in the last half of 2013 but was rescued when it was acquired by China Banking Corporation, a much healthier bank, for Php 1.863 billion last September 18, 2013.  This represents a 40% discount to Planters stated book value of Php 3.133 billion as of September 30, 2013 or a 41% premium to their actual book value of Php 1.323 billion (after subtracting for unbooked losses/deferred charges). For more information regarding this, please read a previous blog post: "The Near Death Experience of Planters Development Bank".

We predicted that another bank on this list, The Real Bank, which had a loan loss provision shortfall of 2.37 times its equity as of March 31, 2014, would have to be recapitalized several times over to meet minimum loan loss provisions on its Gross NPLs.  Just last July 7, 2014, the bank was acquired by BDO Unibank, the largest bank in the country, and it now has the financial resources to undertake this much needed recapitalization.