On the face of it, no.
At 1.65% as of June 30, 2016, NPLs as a percentage of Total Loan Portfolios are at historic lows.
While the NPL coverage ratio is near historic highs at 133.11% as of June 30, 2016, indicating that most banks are adequately provisioned, the ratio is starting to trend downwards and has been doing so for the past three years.
However, 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 4.75% 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 is 4.27% for the past thirty years.
As of June 30, 2016, LLR/TLP stands at 2.20%, 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, 2016 | |||||
| Bank | Loan Loss Provisions | Gross NPLs | NPL Coverage Ratio | ||
| CITYSTATE SAVINGS BANK INC | 29,712,617.86 | 172,898,179.50 | 17.19% | ||
| PHIL POSTAL SAVINGS BANK INC | 313,107,143.75 | 1,536,950,165.58 | 20.37% | ||
| MARITIME SAVINGS BANK CORPORATION | 6,948,645.24 | 32,410,761.69 | 21.44% | ||
| PHIL STAR DEVELOPMENT BANK INC | 6,454,022.91 | 27,476,658.77 | 23.49% | ||
| LUZON DEVELOPMENT BANK | 131,966,669.64 | 494,353,264.19 | 26.69% | ||
| METRO CEBU PUBLIC SAVINGS BANK | 4,953,358.32 | 18,411,436.08 | 26.90% | ||
| ENTERPRISE BANK INC (A THRIFT BANK) | 55,353,813.66 | 203,795,569.05 | 27.16% | ||
| LIFE SAVINGS BANK INC | 4,075,321.67 | 14,292,306.20 | 28.51% | ||
| EQUICOM SAVINGS BANK INC | 198,797,566.90 | 630,278,538.32 | 31.54% | ||
| PRODUCERS SAVINGS BANK CORPORATION | 148,312,084.15 | 347,199,257.38 | 42.72% | ||
| CHINA BANK SAVINGS INC | 2,028,729,027.84 | 4,597,231,811.04 | 44.13% | ||
| BUSINESS AND CONSUMERS BANK (A DB) | 5,623,291.03 | 12,553,457.91 | 44.79% | ||
| BATAAN DEVELOPMENT BANK | 22,746,786.84 | 49,870,042.34 | 45.61% | ||
| PAMPANGA DEVELOPMENT BANK | 25,818,613.34 | 54,236,611.11 | 47.60% | ||
| CENTURY SAVINGS BANK CORPORATION | 17,747,579.87 | 36,913,862.74 | 48.08% | ||
| 1ST VALLEY BANK INC A DEVELOPMENT BANK | 223,403,207.14 | 441,108,498.96 | 50.65% | ||
| MALAYAN BANK SAVINGS AND MORT BANK INC | 185,649,835.75 | 346,183,356.28 | 53.63% | ||
| MAYBANK PHILIPPINES INC | 1,434,674,647.54 | 2,669,115,822.47 | 53.75% | ||
| INTER-ASIA DEVELOPMENT BANK | 4,716,868.03 | 8,643,105.28 | 54.57% | ||
| PHILIPPINE RESOURCES SAVINGS BANKING CORPORATION (PR SAVINGS | 853,127,276.86 | 1,488,786,917.29 | 57.30% | ||
| PENBANK INC (A PDB) (FORMERLY: PENINSULA RB INC) | 88,170,604.74 | 148,090,024.00 | 59.54% | ||
| EAST WEST BANKING CORP | 4,711,477,378.24 | 7,912,724,772.09 | 59.54% | ||
| LEMERY SAVINGS & LOAN BANK, INC. | 2,694,843.51 | 4,490,116.81 | 60.02% | ||
| STERLING BANK OF ASIA INC (A SAVINGS BANK) | 604,041,263.84 | 998,463,824.41 | 60.50% | ||
| DUMAGUETE CITY DEV BANK INC | 18,933,844.50 | 31,101,011.91 | 60.88% | ||
| BANK OF MAKATI (A SAVINGS BANK) INC | 1,573,064,785.99 | 2,532,282,531.41 | 62.12% | ||
| MALASIQUI PROGRESSIVE SLB, INC | 7,184,596.38 | 11,269,279.25 | 63.75% | ||
| UNITED COCONUT PLANTERS BANK | 4,459,420,241.08 | 6,911,986,469.19 | 64.52% | ||
| WEALTH DEVELOPMENT BANK CORPORATION | 123,447,293.06 | 188,858,007.72 | 65.37% | ||
| RCBC SAVINGS BANK INC | 2,137,012,545.11 | 3,199,420,755.50 | 66.79% | ||
| BANK ONE SAVINGS AND TRUST CORP. | 22,094,599.83 | 33,065,795.27 | 66.82% | ||
| STANDARD CHARTERED BANK | 1,563,280,967.21 | 2,284,530,263.09 | 68.43% | ||
| ANZ BANKING GROUP LTD | 278,595,585.60 | 405,496,014.93 | 68.70% | ||
| ASIA UNITED BANK CORPORATION | 1,787,052,601.74 | 2,547,367,758.05 | 70.15% | ||
| PNB SAVINGS BANK | 451,994,826.03 | 634,871,221.72 | 71.19% | ||
| PHILIPPINE BUSINESS BANK INC A SAVINGS BANK | 1,062,951,000.48 | 1,408,994,771.06 | 75.44% | ||
| SAMPAGUITA SAVINGS BANK INC | 17,591,087.34 | 22,793,200.13 | 77.18% | ||
| NORTHPOINT DEV'T BANK INC | 70,495,119.82 | 90,582,110.63 | 77.82% | ||
| TOWER DEVELOPMENT BANK | 5,384,178.71 | 6,685,537.47 | 80.53% | ||
| UCPB SAVINGS BANK | 535,399,498.58 | 661,234,335.20 | 80.97% | ||
| PHILIPPINE VETERANS BANK | 1,341,618,638.49 | 1,622,350,451.99 | 82.70% | ||
| CORDILLERA SAVINGS BANK INC | 13,415,675.60 | 16,133,117.87 | 83.16% | ||
| OPTIMUM DEVELOPMENT BANK INC | 44,215,809.90 | 53,012,292.60 | 83.41% | ||
| SUN SAVINGS BANK INC | 13,128,990.79 | 15,076,384.11 | 87.08% | ||
| CITY SAVINGS BANK INC | 1,167,405,306.49 | 1,334,979,051.51 | 87.45% | ||
| DEVELOPMENT BANK OF THE PHIL | 6,102,019,962.84 | 6,911,247,997.24 | 88.29% | ||
| BPI FAMILY SAVINGS BANK INC | 6,329,880,019.50 | 7,159,565,168.62 | 88.41% | ||
| PACIFIC ACE SAVINGS BANK INC | 3,179,420.24 | 3,585,558.79 | 88.67% | ||
| LEGAZPI SAVINGS BANK INC | 401,814,762.28 | 452,148,179.99 | 88.87% | ||
| OPPORTUNITY KAUSWAGAN BANK INC (A MICROFINANCE THRIFT BANK) | 58,170,976.06 | 65,330,857.95 | 89.04% | ||
| PHIL BANK OF COMMUNICATIONS | 2,048,523,995.31 | 2,290,272,280.26 | 89.44% | ||
| ROBINSONS BANK CORPORATION | 660,708,903.88 | 736,544,892.86 | 89.70% | ||
| QUEEN CITY DEVELOPMENT BANK INC OR QUEENBANK A THRIFT BANK | 19,171,204.16 | 21,263,240.90 | 90.16% | ||
| DUNGGANON BANK (A MICROFINANCE THRIFT BANK) INC | 21,162,208.82 | 23,281,894.32 | 90.90% | ||
| THE PALAWAN BANK (PALAWAN DB) INC | 18,882,676.82 | 20,480,768.99 | 92.20% | ||
| WORLD PARTNERS BANK (A THRIFT BANK) | 74,239,747.31 | 79,014,643.18 | 93.96% | ||
| PHIL SAVINGS BANK | 4,277,993,167.06 | 4,530,087,688.77 | 94.44% | ||
| FARMERS SAVINGS & LOAN BANK INC | 31,418,132.71 | 32,517,022.88 | 96.62% | ||
| MBANK PHILIPPINES (A THRIFT BANK) INC | 42,626,590.24 | 43,962,199.62 | 96.96% | ||
| BATAAN SAVINGS AND LOAN BANK | 1,595,044.62 | 1,611,819.28 | 98.96% | ||
| MICROFINANCE MAXIMUM SB INC | 2,268,856.85 | 2,225,328.29 | 101.96% | ||
| BPI DIRECT SAVINGS BANK INC | 226,232,039.42 | 214,944,591.75 | 105.25% | ||
| UNION BANK OF THE PHILS | 8,704,213,938.79 | 8,218,543,573.33 | 105.91% | ||
| TONGYANG SAVINGS BANK INC | 112,061,459.66 | 104,687,339.74 | 107.04% | ||
| VILLAGE BANK INC (A THRIFT BANK) | 21,809,265.59 | 20,141,994.78 | 108.28% | ||
| HONGKONG & SHANGHAI BANKING CORP | 981,203,722.83 | 895,618,873.66 | 109.56% | ||
| BANK OF COMMERCE | 2,119,632,602.94 | 1,886,506,044.85 | 112.36% | ||
| CTBC BANK (PHILIPPINES) CORP | 532,137,157.57 | 472,679,805.76 | 112.58% | ||
| CHINA BANKING CORP | 6,306,325,862.48 | 4,911,880,180.52 | 128.39% | ||
| PHIL NATIONAL BANK | 11,540,969,653.77 | 8,768,808,377.16 | 131.61% | ||
| LAND BANK OF THE PHILIPPINES | 10,980,298,288.88 | 8,111,482,236.93 | 135.37% | ||
| FIRST CONSOLIDATED BANK INC (A PDB) | 662,459,968.75 | 465,383,904.95 | 142.35% | ||
| HSBC SAVINGS BANK(PHILS) INC | 99,535,324.95 | 68,072,101.26 | 146.22% | ||
| QUEZON COCONUT BANK INC (A THRIFT BANK) | 1,350,781.52 | 893,105.94 | 151.25% | ||
| MERCHANTS SAVINGS & LOAN ASSN INC | 22,856,839.85 | 15,073,857.84 | 151.63% | ||
| BANK OF CHINA LIMITED-MANILA BRANCH | 293,454,774.49 | 189,040,895.91 | 155.23% | ||
| BDO UNIBANK INC | 24,333,841,082.64 | 14,719,008,662.34 | 165.32% | ||
| RIZAL COMM'L BANKING CORP | 3,320,277,428.22 | 1,916,664,973.55 | 173.23% | ||
| HIYAS BANKING CORPORATION | 28,762,365.69 | 16,135,287.17 | 178.26% | ||
| BANK OF THE PHIL ISLANDS | 13,549,323,083.55 | 7,354,653,970.24 | 184.23% | ||
| CARD SME BANK INC A THRIFT BANK | 73,570,445.95 | 38,629,666.38 | 190.45% | ||
| PHIL TRUST COMPANY | 2,229,403,428.42 | 1,158,050,201.78 | 192.51% | ||
| UNIVERSITY SAVINGS BANK INC | 42,576,227.15 | 20,846,206.47 | 204.24% | ||
| KOREA EXCHANGE BANK | 49,295,622.91 | 23,050,189.24 | 213.86% | ||
| SECURITY BANK CORP | 3,435,726,132.11 | 1,601,550,101.28 | 214.53% | ||
| AL-AMANAH ISLAMIC INVESTMENT BANK OF THE PHILS | 4,067,517.76 | 1,092,048.97 | 372.47% | ||
| METROPOLITAN BANK & TCO | 10,589,832,461.64 | 2,804,893,015.34 | 377.55% | ||
| CITIBANK, N.A. | 5,597,817,935.35 | 826,105,236.33 | 677.62% | ||
| BANGKOK BANK PUBLIC CO LTD | 318,492,250.00 | 46,936,941.43 | 678.55% | ||
| ING BANK N.V. | 67,685,908.78 | 96.12 | 70418132.31% | ||
| BANK OF AMERICA N.A. | 27,700,000.00 | 0.00 | NA | ||
| BDO PRIVATE BANK, INC. | 181,050,261.34 | 0.00 | NA | ||
| CATHAY UNITED BANK CO LTD - MANILA BRANCH | 6,773,044.06 | 0.00 | NA | ||
| DEUTSCHE BANK AG | 93,908,874.70 | 0.00 | NA | ||
| INDUSTRIAL BANK OF KOREA MANILA BRANCH | 7,986,287.97 | 0.00 | NA | ||
| ISLA BANK(A THRIFT BANK) INC | 4,290,580.33 | 0.00 | NA | ||
| JP MORGAN CHASE BANK NATIONAL ASSN. | 19,265,114.78 | 0.00 | NA | ||
| MEGA INT'L COMM'L BANK CO LTD | 256,278,317.08 | 0.00 | NA | ||
| MIZUHO BANK LTD - MANILA BRANCH | 329,988,262.95 | 0.00 | NA | ||
| SHINHAN BANK - MANILA BRANCH | 2,516,770.00 | 0.00 | NA | ||
| SUMITOMO MITSUI BANKING CORPORATION-MANILA BRANCH | 47,102,184.19 | 0.00 | NA | ||
| THE BNK OF TOKYO-MITSUBISHI UFJ LTD | 388,210,030.46 | 0.00 | NA | ||
| UNITED OVERSEAS BANK LIMITED MANILA BRANCH | 6,326,254.85 | 0.00 | NA | ||
| Grand Total | 155,512,254,884.47 | 133,503,081,743.06 | 116.49% | ||
Source: www.bsp.gov.ph
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