Are Philippine banks under provisioning loan losses?
On the face of it, no.
At 2.95% as of June 2014, NPLs as a percentage of Total Loan Portfolios are at or near historic lows.
At 2.95% as of June 2014, NPLs as a percentage of Total Loan Portfolios are at or near historic lows.
While the NPL coverage ratio is at historic highs at 140.63% as of June 2014, indicating that most banks are adequately provisioned.
But NPLs can go much higher than current levels. Over the past thirty years, NPLs as a percentage of Total Loan Portfolios averaged 8.80% for Philippine Universal and Commercial Banks. Moreover, Loan Loss Reserves (LLR) as a percentage of Total Loan Portfolio (TLP) have averaged 4.84% for the past thirty years. As can be seen from the chart below, loan loss reserves hit a peak of 22.23% of TLP in 1986, an outlier. Without this outlier, LLR/TLP average 4.42% for the past thirty years.
As of June 2014, LLR/TLP stands at 2.95%, which is below the historical average of 4.43%, indicating that Philippine banks are underprovisioning for loan losses, given historical norms. If Philippine banks were to maintain higher loan loss provisions to conform to historical averages, bank earnings will suffer but will be better provisioned for future losses.
Now, which banks have not adequately provisioned for loan losses at their current NPL levels, which are at historic lows? Those highlighted in yellow (below 80% NPL Coverage Ratio) are prime candidates.
Now, which banks have not adequately provisioned for loan losses at their current NPL levels, which are at historic lows? Those highlighted in yellow (below 80% NPL Coverage Ratio) are prime candidates.
| 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% |
Source: www.bsp.gov.ph
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