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% | ||
Source: www.bsp.gov.ph
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