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Tuesday, February 23, 2016

Are Philippine Banks Under Provisioning Loan Losses? - As of June 30, 2015

Are Philippine banks under provisioning loan losses?

On the face of it, no.

At 1.84% as of June 30, 2015, NPLs as a percentage of Total Loan Portfolios are at or near historic lows.




While the NPL coverage ratio is near historic highs at 143.35% as of June 30, 2015, indicating that most bank 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 8.78% for Philippine Universal and Commercial Banks. Moreover, Loan Loss Reserves (LLR) as a percentage of Total Loan Portfolio (TLP) have averaged 4.76% 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 4.27% for the past thirty years.





As of June 30, 2015, LLR/TLP stands at 2.64%, which is below the historical average of 4.27%, indicating that Philippine banks are under-provisioning 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.



Philippine Banking System
NPL Coverage Ratio
June 30, 2015








Bank Loan Loss Provisions Gross NPLs NPL Coverage Ratio
COMSAVINGS BANK 26,524,008.81 191,248,203.56 13.87%
METRO CEBU PUBLIC SAVINGS BANK 7,117,474.10 36,277,745.75 19.62%
LUZON DEVELOPMENT BANK 101,707,338.27 507,609,992.92 20.04%
LIFE SAVINGS BANK INC 2,775,321.67 12,879,682.98 21.55%
PROGRESS SAVINGS AND LOAN BANK INC 284,522.97 1,173,321.24 24.25%
BATAAN DEVELOPMENT BANK 15,389,516.22 57,986,706.97 26.54%
OPPORTUNITY KAUSWAGAN BANK INC 19,608,083.83 73,180,619.07 26.79%
PHIL STAR DEVELOPMENT BANK INC 6,090,315.48 21,842,920.67 27.88%
MARITIME SAVINGS BANK CORPORATION 6,948,645.24 24,336,715.99 28.55%
CITYSTATE SAVINGS BANK INC 35,330,430.42 112,842,411.58 31.31%
CENTURY SAVINGS BANK CORPORATION 13,586,035.87 40,593,678.08 33.47%
1ST VALLEY BANK INC A DEVELOPMENT BANK 181,210,521.91 514,075,882.16 35.25%
BANK ONE SAVINGS AND TRUST CORP. 9,533,602.53 25,295,100.90 37.69%
ENTERPRISE BANK INC 55,353,813.66 137,191,643.05 40.35%
CHINA BANK SAVINGS INC 464,766,096.05 1,122,705,244.22 41.40%
LEMERY SAVINGS & LOAN BANK, INC. 2,348,978.31 5,487,710.87 42.80%
WEALTH DEVELOPMENT BANK CORPORATION 64,891,455.82 151,263,604.62 42.90%
PAMPANGA DEVELOPMENT BANK 22,807,091.55 52,701,336.06 43.28%
PLANTERS DEVELOPMENT BANK 1,274,051,478.94 2,866,123,172.95 44.45%
MALAYAN BANK SAVINGS AND MORT BANK INC 296,603,616.51 666,754,530.61 44.48%
BANK OF MAKATI INC 1,270,888,970.83 2,818,397,854.23 45.09%
PNB SAVINGS BANK 223,071,342.94 462,335,523.76 48.25%
QUEEN CITY DEVELOPMENT BANK INC OR QUEENBANK A THRIFT BANK 19,171,217.16 39,629,087.22 48.38%
EQUICOM SAVINGS BANK INC 233,391,870.14 472,651,774.12 49.38%
DUMAGUETE CITY DEV BANK INC 16,533,857.12 32,759,929.63 50.47%
BUSINESS AND CONSUMERS BANK 7,089,358.25 14,017,010.15 50.58%
LEGAZPI SAVINGS BANK INC 227,461,966.19 434,713,024.80 52.32%
FARMERS SAVINGS & LOAN BANK INC 30,952,782.17 57,441,854.50 53.89%
PENBANK INC 75,325,879.63 139,443,525.53 54.02%
QUEZON COCONUT BANK INC 890,815.28 1,555,545.32 57.27%
WORLD PARTNERS BANK 53,242,755.38 89,604,093.13 59.42%
HIYAS BANKING CORPORATION 6,830,066.93 11,269,981.71 60.60%
EAST WEST BANKING CORP 3,446,701,592.02 5,675,977,313.83 60.72%
RCBC SAVINGS BANK INC 1,756,509,048.17 2,783,963,439.87 63.09%
STANDARD CHARTERED BANK 1,607,360,910.95 2,493,311,908.62 64.47%
MAYBANK PHILIPPINES INC 1,213,325,354.66 1,848,823,142.88 65.63%
NORTHPOINT DEV'T BANK INC 49,659,110.31 74,994,342.73 66.22%
STERLING BANK OF ASIA INC 664,323,511.66 966,643,725.69 68.72%
UNITED COCONUT PLANTERS BANK 4,289,520,635.86 6,216,188,128.78 69.01%
PACIFIC ACE SAVINGS BANK INC 2,488,306.15 3,458,594.64 71.95%
TOWER DEVELOPMENT BANK 7,248,518.60 9,924,927.53 73.03%
PHILIPPINE VETERANS BANK 1,190,126,056.52 1,610,731,794.85 73.89%
CORDILLERA SAVINGS BANK INC 10,888,311.84 14,627,746.41 74.44%
VILLAGE BANK INC 17,342,200.42 22,730,914.51 76.29%
PHIL POSTAL SAVINGS BANK INC 418,158,225.90 544,029,479.50 76.86%
PHIL BANK OF COMMUNICATIONS 1,507,617,042.79 1,891,849,658.47 79.69%
ASIA UNITED BANK CORPORATION 1,414,327,821.04 1,696,605,696.49 83.36%
PHILIPPINE BUSINESS BANK INC A SAVINGS BANK 838,201,501.15 994,057,951.15 84.32%
DUNGGANON BANK INC 25,154,579.46 29,498,300.43 85.27%
INTER-ASIA DEVELOPMENT BANK 6,801,740.33 7,914,470.56 85.94%
CITY SAVINGS BANK INC 751,453,233.25 872,211,070.89 86.15%
PHILIPPINE RESOURCES SAVINGS BANKING CORPORATION 444,930,624.40 513,198,327.06 86.70%
TONGYANG SAVINGS BANK INC 96,584,592.57 108,006,887.41 89.42%
FIRST CONSOLIDATED BANK INC 558,223,056.74 621,355,629.59 89.84%
ROBINSONS BANK CORPORATION 584,864,556.87 648,281,449.20 90.22%
PRODUCERS SAVINGS BANK CORPORATION 96,825,798.45 106,929,506.68 90.55%
MBANK PHILIPPINES INC 35,893,576.22 39,073,209.15 91.86%
THE PALAWAN BANK INC 14,911,878.00 15,987,772.37 93.27%
BPI GLOBE BANKO INC A SAVINGS BANK 283,543,370.29 303,033,785.12 93.57%
PHIL SAVINGS BANK 4,135,109,207.22 4,372,148,005.47 94.58%
MICROFINANCE MAXIMUM SB INC 2,449,105.34 2,552,934.15 95.93%
MALASIQUI PROGRESSIVE SLB, INC 7,184,596.38 7,410,279.25 96.95%
SUN SAVINGS BANK INC 10,119,012.45 10,273,588.19 98.50%
SAMPAGUITA SAVINGS BANK INC 19,372,274.63 19,593,200.13 98.87%
BPI FAMILY SAVINGS BANK INC 5,242,948,902.57 5,226,490,529.12 100.31%
DEVELOPMENT BANK OF THE PHIL 5,825,540,366.35 5,759,578,869.42 101.15%
UNITED OVERSEAS BANK PHILIPPINES 178,181,418.36 171,836,043.28 103.69%
UNION BANK OF THE PHILS 10,230,725,092.14 9,798,205,751.44 104.41%
BATAAN SAVINGS AND LOAN BANK 1,595,044.62 1,505,600.05 105.94%
BPI DIRECT SAVINGS BANK INC 199,514,242.91 184,823,670.37 107.95%
UCPB SAVINGS BANK 559,662,944.28 516,146,099.25 108.43%
HONGKONG & SHANGHAI BANKING CORP 1,113,764,987.59 1,007,193,050.23 110.58%
OPTIMUM DEVELOPMENT BANK INC 44,568,839.06 38,142,223.56 116.85%
PHIL NATIONAL BANK 10,870,858,796.60 9,067,066,902.31 119.89%
CTBC BANK CORP 456,229,146.37 365,040,429.64 124.98%
CHINA BANKING CORP 6,492,831,650.19 4,921,349,996.05 131.93%
BANK OF COMMERCE 2,785,749,948.01 1,943,428,393.34 143.34%
BANK OF CHINA LIMITED-MANILA BRANCH 276,690,735.42 189,040,895.91 146.37%
BANK OF THE PHIL ISLANDS 12,465,038,575.34 8,502,678,861.67 146.60%
RIZAL COMM'L BANKING CORP 3,410,354,798.99 2,143,107,451.90 159.13%
LAND BANK OF THE PHILIPPINES 11,166,963,849.45 7,001,091,253.62 159.50%
UNIVERSITY SAVINGS BANK INC 41,976,227.15 25,738,333.50 163.09%
HSBC SAVINGS BANK(PHILS) INC 96,230,791.85 58,688,758.57 163.97%
MERCHANTS SAVINGS & LOAN ASSN INC 11,492,048.27 6,962,105.76 165.07%
CARD SME BANK INC A THRIFT BANK 60,356,259.08 34,383,674.39 175.54%
BDO UNIBANK INC 29,103,066,280.28 15,535,855,128.06 187.33%
PHIL TRUST COMPANY 2,172,762,477.90 1,092,003,102.85 198.97%
SECURITY BANK CORP 3,313,888,668.43 1,362,633,210.54 243.20%
AL-AMANAH ISLAMIC INVESTMENT BANK OF THE PHILS 2,796,064.67 1,092,048.97 256.04%
KOREA EXCHANGE BANK 68,356,002.32 23,550,181.36 290.26%
MEGA INT'L COMM'L BANK CO LTD 233,414,801.27 66,450,000.00 351.26%
METROPOLITAN BANK & TCO 12,405,579,120.51 2,557,929,137.05 484.99%
CITIBANK, N.A. 5,637,371,433.70 674,220,900.00 836.13%
ANZ BANKING GROUP LTD 267,148,381.01 23,339,114.85 1144.64%
JP MORGAN CHASE BANK NATIONAL ASSN. 20,225,450.00 734,885.22 2752.19%
BANGKOK BANK PUBLIC CO LTD 234,869,285.00 4,662,165.64 5037.77%
INTERNATIONALE NEDERLANDEN GROEP BK 108,418,539.09 92.18 117616119.65%
BANK OF AMERICA N.A. 24,700,000.00 4.00 617500000.00%
BDO ELITE SAVINGS BANK INC 0.00 0.00 NA
BDO PRIVATE BANK, INC. 89,305,938.02 0.00 NA
DEUTSCHE BANK AG 179,913,607.31 0.00 NA
ISLA BANK INC 4,290,580.33 0.00 NA
MIZUHO BANK LTD - MANILA BRANCH 329,979,495.38 0.00 NA
THE BNK OF TOKYO-MITSUBISHI UFJ LTD 383,710,030.46 0.00 NA
Grand Total 156,390,069,401.10 124,025,745,474.05 126.09%

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