On the face of it, no.
At 1.60% as of September 30, 2016, NPLs as a percentage of Total Loan Portfolios are at historic lows.
While the NPL coverage ratio is near historic highs at 135.64% as of September 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-four 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 4.68% 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 4.14% for the past thirty-four years.
As of September 30, 2016, LLR/TLP stands at 2.17%, which is below the historical average of 4.14%, 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 | |||||
| September 30, 2016 | |||||
| Bank | Loan Loss Provisions | Gross NPLs | NPL Coverage Ratio | ||
| METRO CEBU PUBLIC SAVINGS BANK | 4,953,358.32 | 25,320,036.75 | 19.56% | ||
| PHIL POSTAL SAVINGS BANK INC | 328,380,655.72 | 1,640,187,915.83 | 20.02% | ||
| CITYSTATE SAVINGS BANK INC | 28,480,676.03 | 140,511,602.44 | 20.27% | ||
| MARITIME SAVINGS BANK CORPORATION | 6,948,645.24 | 27,430,460.04 | 25.33% | ||
| LUZON DEVELOPMENT BANK | 133,271,068.67 | 517,066,469.62 | 25.77% | ||
| ENTERPRISE BANK INC (A THRIFT BANK) | 55,353,813.66 | 198,058,282.51 | 27.95% | ||
| EQUICOM SAVINGS BANK INC | 190,837,584.24 | 636,811,214.24 | 29.97% | ||
| LIFE SAVINGS BANK INC | 4,675,321.67 | 13,535,320.94 | 34.54% | ||
| OPTIMUM DEVELOPMENT BANK INC | 44,215,809.90 | 109,784,239.74 | 40.28% | ||
| PRODUCERS SAVINGS BANK CORPORATION | 177,261,734.04 | 426,272,143.49 | 41.58% | ||
| PHIL STAR DEVELOPMENT BANK INC | 8,487,331.25 | 20,032,181.12 | 42.37% | ||
| UNIVERSITY SAVINGS BANK INC | 42,876,227.15 | 89,865,132.18 | 47.71% | ||
| ANZ BANKING GROUP LTD | 196,768,661.88 | 405,519,723.90 | 48.52% | ||
| CHINA BANK SAVINGS INC | 2,186,394,027.84 | 4,502,299,081.60 | 48.56% | ||
| WEALTH DEVELOPMENT BANK CORPORATION | 125,451,510.11 | 252,365,406.44 | 49.71% | ||
| MICROFINANCE MAXIMUM SB INC | 2,956,657.50 | 5,801,774.13 | 50.96% | ||
| PAMPANGA DEVELOPMENT BANK | 27,878,613.34 | 54,092,503.50 | 51.54% | ||
| BANK ONE SAVINGS AND TRUST CORP. | 12,136,266.46 | 23,103,734.39 | 52.53% | ||
| WORLD PARTNERS BANK (A THRIFT BANK) | 74,239,747.31 | 137,429,309.44 | 54.02% | ||
| UCPB SAVINGS BANK | 541,991,838.02 | 985,724,574.61 | 54.98% | ||
| MALAYAN BANK SAVINGS AND MORT BANK INC | 186,090,171.22 | 335,052,548.11 | 55.54% | ||
| BATAAN DEVELOPMENT BANK | 22,746,786.84 | 40,443,319.15 | 56.24% | ||
| PHILIPPINE RESOURCES SAVINGS BANKING CORPORATION (PR SAVINGS | 841,716,517.70 | 1,472,388,536.66 | 57.17% | ||
| DUMAGUETE CITY DEV BANK INC | 18,933,844.50 | 32,589,350.10 | 58.10% | ||
| 1ST VALLEY BANK INC A DEVELOPMENT BANK | 260,762,192.35 | 447,820,468.00 | 58.23% | ||
| CENTURY SAVINGS BANK CORPORATION | 21,061,844.89 | 35,947,320.47 | 58.59% | ||
| EAST WEST BANKING CORP | 5,087,326,013.70 | 8,502,163,356.59 | 59.84% | ||
| PENBANK INC (A PDB) (FORMERLY: PENINSULA RB INC) | 93,434,088.93 | 151,518,194.30 | 61.67% | ||
| RCBC SAVINGS BANK INC | 2,252,012,545.11 | 3,563,204,986.32 | 63.20% | ||
| STERLING BANK OF ASIA INC (A SAVINGS BANK) | 623,648,572.57 | 972,054,930.79 | 64.16% | ||
| PNB SAVINGS BANK | 503,142,862.89 | 768,619,166.47 | 65.46% | ||
| STANDARD CHARTERED BANK | 1,581,601,894.93 | 2,277,960,050.89 | 69.43% | ||
| UNITED COCONUT PLANTERS BANK | 4,386,715,924.52 | 6,312,050,076.31 | 69.50% | ||
| OPPORTUNITY KAUSWAGAN BANK INC (A MICROFINANCE THRIFT BANK) | 70,536,847.02 | 100,478,233.20 | 70.20% | ||
| INTER-ASIA DEVELOPMENT BANK | 6,108,593.42 | 8,568,049.77 | 71.30% | ||
| BANK OF MAKATI (A SAVINGS BANK) INC | 1,279,993,349.29 | 1,715,453,783.07 | 74.62% | ||
| PHILIPPINE VETERANS BANK | 1,442,288,794.21 | 1,920,148,532.73 | 75.11% | ||
| PHILIPPINE BUSINESS BANK INC A SAVINGS BANK | 1,102,951,000.48 | 1,467,430,873.86 | 75.16% | ||
| BUSINESS AND CONSUMERS BANK (A DB) | 12,228,943.90 | 15,921,373.30 | 76.81% | ||
| NORTHPOINT DEV'T BANK INC | 77,237,597.04 | 100,382,035.16 | 76.94% | ||
| LEMERY SAVINGS & LOAN BANK, INC. | 2,694,843.51 | 3,502,078.88 | 76.95% | ||
| MALASIQUI PROGRESSIVE SLB, INC | 6,951,706.48 | 8,390,479.25 | 82.85% | ||
| BPI FAMILY SAVINGS BANK INC | 6,824,385,724.35 | 8,123,032,981.64 | 84.01% | ||
| FARMERS SAVINGS & LOAN BANK INC | 31,764,661.83 | 37,783,485.46 | 84.07% | ||
| BATAAN SAVINGS AND LOAN BANK | 1,595,044.62 | 1,889,208.47 | 84.43% | ||
| VILLAGE BANK INC (A THRIFT BANK) | 21,809,265.59 | 25,552,620.63 | 85.35% | ||
| CITY SAVINGS BANK INC | 1,241,782,018.05 | 1,404,431,487.61 | 88.42% | ||
| LEGAZPI SAVINGS BANK INC | 401,890,347.92 | 450,487,116.92 | 89.21% | ||
| MAYBANK PHILIPPINES INC | 2,166,385,398.32 | 2,404,370,029.81 | 90.10% | ||
| BANGKO KABAYAN INC | 30,885,652.55 | 34,185,431.96 | 90.35% | ||
| DEVELOPMENT BANK OF THE PHIL | 6,194,181,739.95 | 6,851,069,030.92 | 90.41% | ||
| QUEEN CITY DEVELOPMENT BANK INC OR QUEENBANK A THRIFT BANK | 19,590,734.06 | 21,604,255.85 | 90.68% | ||
| PHIL BANK OF COMMUNICATIONS | 2,109,948,584.26 | 2,283,081,027.49 | 92.42% | ||
| PACIFIC ACE SAVINGS BANK INC | 3,012,326.51 | 3,201,492.69 | 94.09% | ||
| ROBINSONS BANK CORPORATION | 676,652,992.13 | 713,818,768.00 | 94.79% | ||
| BPI GLOBE BANKO INC A SAVINGS BANK | 327,963,029.70 | 344,373,998.27 | 95.23% | ||
| SUN SAVINGS BANK INC | 14,676,397.29 | 15,302,238.90 | 95.91% | ||
| DUNGGANON BANK (A MICROFINANCE THRIFT BANK) INC | 23,001,810.53 | 23,839,161.85 | 96.49% | ||
| THE PALAWAN BANK (PALAWAN DB) INC | 19,519,468.15 | 20,180,212.89 | 96.73% | ||
| PHIL SAVINGS BANK | 4,356,216,926.02 | 4,475,439,320.31 | 97.34% | ||
| TOWER DEVELOPMENT BANK | 7,347,915.50 | 7,396,175.06 | 99.35% | ||
| CORDILLERA SAVINGS BANK INC | 13,515,675.60 | 13,254,102.64 | 101.97% | ||
| YUANTA SAVINGS BANK PHILIPPINES INC | 109,302,436.49 | 103,695,194.06 | 105.41% | ||
| UNION BANK OF THE PHILS | 8,560,545,350.24 | 7,951,594,741.54 | 107.66% | ||
| ASIA UNITED BANK CORPORATION | 2,035,324,952.52 | 1,875,670,487.58 | 108.51% | ||
| BPI DIRECT SAVINGS BANK INC | 219,134,074.98 | 191,837,077.75 | 114.23% | ||
| HONGKONG & SHANGHAI BANKING CORP | 957,725,660.08 | 806,160,007.79 | 118.80% | ||
| BANK OF COMMERCE | 2,256,358,205.52 | 1,855,644,519.55 | 121.59% | ||
| CTBC BANK (PHILIPPINES) CORP | 615,769,619.71 | 485,595,806.28 | 126.81% | ||
| LAND BANK OF THE PHILIPPINES | 10,915,939,152.48 | 8,084,444,246.85 | 135.02% | ||
| PHIL NATIONAL BANK | 11,742,548,354.20 | 8,518,905,151.86 | 137.84% | ||
| CHINA BANKING CORP | 6,406,694,336.24 | 4,609,661,975.35 | 138.98% | ||
| FIRST CONSOLIDATED BANK INC (A PDB) | 682,198,923.56 | 448,961,979.40 | 151.95% | ||
| BDO UNIBANK INC | 24,165,959,516.61 | 15,455,700,305.05 | 156.36% | ||
| HSBC SAVINGS BANK(PHILS) INC | 95,786,577.54 | 61,066,188.09 | 156.86% | ||
| BANK OF THE PHIL ISLANDS | 13,589,521,070.41 | 7,996,789,257.69 | 169.94% | ||
| RIZAL COMM'L BANKING CORP | 3,318,514,885.24 | 1,939,990,833.94 | 171.06% | ||
| CARD SME BANK INC A THRIFT BANK | 80,342,981.79 | 45,647,812.97 | 176.01% | ||
| BANK OF CHINA LIMITED-MANILA BRANCH | 346,774,298.12 | 189,040,895.91 | 183.44% | ||
| SECURITY BANK CORP | 4,099,868,175.52 | 2,232,110,933.80 | 183.68% | ||
| PHIL TRUST COMPANY | 2,237,032,428.42 | 1,179,597,115.48 | 189.64% | ||
| HIYAS BANKING CORPORATION | 28,859,545.81 | 13,845,821.64 | 208.44% | ||
| QUEZON COCONUT BANK INC (A THRIFT BANK) | 1,350,781.52 | 604,828.80 | 223.33% | ||
| KOREA EXCHANGE BANK | 52,187,086.00 | 23,050,195.00 | 226.41% | ||
| AL-AMANAH ISLAMIC INVESTMENT BANK OF THE PHILS | 3,977,150.93 | 1,092,048.97 | 364.19% | ||
| METROPOLITAN BANK & TCO | 10,853,284,173.86 | 2,689,483,124.87 | 403.55% | ||
| CITIBANK, N.A. | 5,594,258,940.93 | 788,325,974.03 | 709.64% | ||
| BANGKOK BANK PUBLIC CO LTD | 343,398,250.00 | 45,436,941.43 | 755.77% | ||
| ING BANK N.V. | 67,469,911.66 | 99.00 | 68151425.92% | ||
| BANK OF AMERICA N.A. | 27,700,000.00 | 0.00 | NA | ||
| BDO PRIVATE BANK, INC. | 181,900,983.84 | 0.00 | NA | ||
| CATHAY UNITED BANK CO LTD - MANILA BRANCH | 7,913,842.84 | 0.00 | NA | ||
| DEUTSCHE BANK AG | 94,656,413.25 | 0.00 | NA | ||
| INDUSTRIAL BANK OF KOREA MANILA BRANCH | 8,817,034.68 | 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 | 284,736,230.00 | 0.00 | NA | ||
| MERCHANTS SAVINGS & LOAN ASSN INC | 0.00 | NA | NA | ||
| MIZUHO BANK LTD - MANILA BRANCH | 371,984,357.75 | 0.00 | NA | ||
| SAMPAGUITA SAVINGS BANK INC | 0.00 | NA | NA | ||
| SHINHAN BANK - MANILA BRANCH | 4,319,050.00 | 0.00 | NA | ||
| SUMITOMO MITSUI BANKING CORPORATION-MANILA BRANCH | 63,308,100.00 | 0.00 | NA | ||
| THE BNK OF TOKYO-MITSUBISHI UFJ LTD | 388,210,030.46 | 0.00 | NA | ||
| TONGYANG SAVINGS BANK INC | 0.00 | NA | NA | ||
| UNITED OVERSEAS BANK LIMITED MANILA BRANCH | 6,778,051.65 | 0.00 | NA | ||
| Grand Total | 159,403,876,826.74 | 135,311,544,562.34 | 117.81% | ||
Source: www.bsp.gov.ph
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