Editor's Note: For the purposes of this article, Philippine Banks or the Philippine Banking System refers to the Philippine Commercial and Universal Banking System and the Philippine Thrift Banking System. We are ignoring the Philippine Rural and Cooperative Banking System whose asset base is tiny in comparison to the whole banking system (Php 211.93 billion or 1.56% of the Php 13,591.20 billion in assets held in the Philippine Banking System as of December 31, 2016).
In an April 9, 2012 article entitled "Stress Test Proves Strength of PH Banks", "Philippine banks are seen to survive a disaster in which the various lenders are forced to write off loans as large as PhP 36 billion without asking shareholders, the central bank, or the national government for bailout money." This assertion stems from a recent stress test conducted by the Bangko Sentral ng Pilipinas (BSP) on all 55 regular and commercial and expanded license banks.
For Philippine Banks, these NPLs currently comprise PhP 144.16 billion or 9.31% of the PhP 1,548.09 billion in Stockholders Equity (SE) as of December 31, 2016. So, writing off 50% of the Philippine Banks NPLs would reduce their aggregate stockholder's equity by a little less than 5%.
Naturally, some banks would be more affected than others. For more information regarding this, please read The Top Distressed Philippine Banks as of December 31, 2016).
The stockholder's equity of seven banks would be severely affected. These banks are:
- Philippine Postal Savings Bank Inc (104.92% decline in SE)
- World Partners Bank (88.86% decline in SE)
- Luzon Development Bank (77.65% decline in SE)
- Equicom Savings Bank (46.12% decline in SE)
- Legazpi Savings Bank Inc (89.86% decline in SE)
- Enterprise Bank Inc (42.47% decline in SE)
- Maritime Savings Bank Corporation (33.18% decline in SE)
| Philippine Banking System | |||
| NPL as % of SE | |||
| December 31, 2016 | |||
| NPL | SE | NPL/SE | |
| Bank | (In PHP) | (In PHP) | (In %) |
| PHIL POSTAL SAVINGS BANK INC | 2,105,663,775.71 | 1,003,426,168.74 | 209.85% |
| WORLD PARTNERS BANK (A THRIFT BANK) | 107,415,667.13 | 60,443,031.24 | 177.71% |
| LUZON DEVELOPMENT BANK | 544,175,490.99 | 350,396,970.60 | 155.30% |
| EQUICOM SAVINGS BANK INC | 601,715,967.86 | 652,349,264.94 | 92.24% |
| LEGAZPI SAVINGS BANK INC | 447,417,498.87 | 497,881,105.80 | 89.86% |
| ENTERPRISE BANK INC (A THRIFT BANK) | 232,694,561.97 | 273,953,562.02 | 84.94% |
| MARITIME SAVINGS BANK CORPORATION | 24,652,054.39 | 37,146,334.12 | 66.36% |
| MALAYAN BANK SAVINGS AND MORT BANK INC | 574,727,293.20 | 1,004,218,467.21 | 57.23% |
| PHILIPPINE RESOURCES SAVINGS BANKING CORPORATION (PR SAVINGS | 955,755,336.48 | 1,915,584,496.80 | 49.89% |
| CHINA BANK SAVINGS INC | 4,293,974,170.33 | 9,156,290,253.10 | 46.90% |
| PHILIPPINE VETERANS BANK | 1,898,738,872.12 | 4,139,442,922.32 | 45.87% |
| BATAAN DEVELOPMENT BANK | 31,340,481.42 | 77,178,559.44 | 40.61% |
| THE PALAWAN BANK (PALAWAN DB) INC | 14,849,692.88 | 39,202,654.77 | 37.88% |
| STERLING BANK OF ASIA INC (A SAVINGS BANK) | 936,700,031.78 | 2,495,553,616.49 | 37.53% |
| PAMPANGA DEVELOPMENT BANK | 49,744,868.65 | 133,860,245.35 | 37.16% |
| NORTHPOINT DEV'T BANK INC | 122,915,455.83 | 343,580,397.41 | 35.77% |
| RCBC SAVINGS BANK INC | 3,715,336,441.78 | 10,404,065,960.55 | 35.71% |
| UCPB SAVINGS BANK | 975,156,384.32 | 2,742,614,192.92 | 35.56% |
| BANK OF MAKATI (A SAVINGS BANK) INC | 2,243,073,464.02 | 6,358,015,586.16 | 35.28% |
| UNITED COCONUT PLANTERS BANK | 5,989,286,726.79 | 17,592,468,014.29 | 34.04% |
| METRO CEBU PUBLIC SAVINGS BANK | 21,100,005.39 | 64,435,089.21 | 32.75% |
| PENBANK INC (A PDB) (FORMERLY: PENINSULA RB INC) | 146,519,151.74 | 457,096,842.49 | 32.05% |
| BPI DIRECT BANKO INC A SAVINGS BANK | 547,319,743.95 | 1,791,106,416.26 | 30.56% |
| BPI FAMILY SAVINGS BANK INC | 7,497,941,572.20 | 25,553,872,912.78 | 29.34% |
| DUNGGANON BANK (A MICROFINANCE THRIFT BANK) INC | 28,178,352.90 | 106,910,119.62 | 26.36% |
| STANDARD CHARTERED BANK | 2,123,003,347.70 | 8,629,977,138.18 | 24.60% |
| VILLAGE BANK INC (A THRIFT BANK) | 20,037,722.29 | 81,902,520.23 | 24.47% |
| MALASIQUI PROGRESSIVE SLB, INC | 12,713,229.25 | 52,140,796.94 | 24.38% |
| PHIL SAVINGS BANK | 4,531,110,557.04 | 18,768,152,432.53 | 24.14% |
| EAST WEST BANKING CORP | 8,227,387,109.25 | 34,222,509,373.79 | 24.04% |
| 1ST VALLEY BANK INC A DEVELOPMENT BANK | 346,548,011.68 | 1,442,686,809.84 | 24.02% |
| HIYAS BANKING CORPORATION | 34,826,424.16 | 152,412,656.01 | 22.85% |
| PHIL BANK OF COMMUNICATIONS | 2,259,014,990.06 | 10,241,013,449.75 | 22.06% |
| LIFE SAVINGS BANK INC | 14,205,894.15 | 66,516,103.17 | 21.36% |
| PHIL STAR DEVELOPMENT BANK INC | 19,238,385.28 | 93,400,200.78 | 20.60% |
| PRODUCERS SAVINGS BANK CORPORATION | 311,505,684.33 | 1,585,786,138.30 | 19.64% |
| FARMERS SAVINGS & LOAN BANK INC | 22,696,612.39 | 119,179,639.67 | 19.04% |
| WEALTH DEVELOPMENT BANK CORPORATION | 240,199,722.90 | 1,311,900,631.99 | 18.31% |
| UNIVERSITY SAVINGS BANK INC | 72,145,206.72 | 412,031,156.93 | 17.51% |
| MAYBANK PHILIPPINES INCORPORATED | 2,036,189,716.30 | 11,719,746,835.36 | 17.37% |
| BUSINESS AND CONSUMERS BANK (A DB) | 13,970,890.80 | 84,502,772.49 | 16.53% |
| CITYSTATE SAVINGS BANK INC | 119,756,629.16 | 737,224,113.70 | 16.24% |
| FIRST CONSOLIDATED BANK INC (A PDB) | 590,763,111.01 | 3,875,459,099.11 | 15.24% |
| CITY SAVINGS BANK INC | 1,530,120,230.40 | 10,416,035,951.50 | 14.69% |
| PHILIPPINE BUSINESS BANK INC A SAVINGS BANK | 1,322,295,019.15 | 9,727,579,253.15 | 13.59% |
| UNION BANK OF THE PHILS | 7,778,178,634.93 | 62,333,297,322.59 | 12.48% |
| INTER-ASIA DEVELOPMENT BANK | 7,566,983.61 | 62,495,742.15 | 12.11% |
| BANK OF COMMERCE | 1,777,798,286.62 | 15,364,502,813.09 | 11.57% |
| YUANTA SAVINGS BANK PHILIPPINES INC | 112,039,320.83 | 992,092,118.96 | 11.29% |
| DEVELOPMENT BANK OF THE PHIL | 4,802,651,348.83 | 44,124,381,091.38 | 10.88% |
| CORDILLERA SAVINGS BANK INC | 14,588,524.39 | 135,032,013.61 | 10.80% |
| OPTIMUM DEVELOPMENT BANK INC | 90,959,273.89 | 851,577,817.81 | 10.68% |
| ANZ BANKING GROUP LTD | 404,087,064.26 | 4,150,338,569.51 | 9.74% |
| PHIL NATIONAL BANK | 8,771,559,273.58 | 101,836,861,242.86 | 8.61% |
| BANGKO KABAYAN INC (A PRIVATE DEVELOPMENT BANK) | 39,444,210.03 | 460,453,624.72 | 8.57% |
| LAND BANK OF THE PHILIPPINES | 7,173,190,275.55 | 85,380,060,082.56 | 8.40% |
| SUN SAVINGS BANK INC | 15,103,167.59 | 183,535,477.61 | 8.23% |
| DUMAGUETE CITY DEV BANK INC | 20,850,370.14 | 262,995,356.70 | 7.93% |
| BANK OF CHINA LIMITED-MANILA BRANCH | 189,040,895.91 | 2,532,809,223.93 | 7.46% |
| BDO UNIBANK INC | 15,854,555,894.59 | 216,327,723,797.18 | 7.33% |
| PNB SAVINGS BANK | 829,192,484.27 | 11,498,657,172.27 | 7.21% |
| CARD SME BANK INC A THRIFT BANK | 48,473,003.59 | 709,899,560.31 | 6.83% |
| CITIBANK, N.A. | 869,608,224.33 | 12,835,851,416.84 | 6.77% |
| CTBC BANK (PHILIPPINES) CORP | 460,786,467.63 | 6,904,788,639.67 | 6.67% |
| CHINA BANKING CORP | 3,728,985,069.67 | 57,408,773,230.53 | 6.50% |
| ASIA UNITED BANK CORPORATION | 1,475,266,303.18 | 23,274,345,137.40 | 6.34% |
| ROBINSONS BANK CORPORATION | 691,088,663.30 | 11,896,303,900.32 | 5.81% |
| HONGKONG & SHANGHAI BANKING CORP | 797,673,955.04 | 14,640,228,446.42 | 5.45% |
| PHIL TRUST COMPANY | 1,172,897,983.43 | 23,045,761,182.07 | 5.09% |
| BANK OF THE PHIL ISLANDS | 7,688,633,689.58 | 160,549,310,710.50 | 4.79% |
| BANK ONE SAVINGS AND TRUST CORP. | 23,101,952.55 | 575,219,918.21 | 4.02% |
| LEMERY SAVINGS & LOAN BANK, INC. | 2,987,856.52 | 79,181,809.28 | 3.77% |
| CENTURY SAVINGS BANK CORPORATION | 34,734,041.96 | 971,015,155.84 | 3.58% |
| HSBC SAVINGS BANK(PHILS) INC | 63,448,045.28 | 1,797,588,220.73 | 3.53% |
| QUEEN CITY DEVELOPMENT BANK INC OR QUEENBANK A THRIFT BANK | 22,071,051.75 | 658,121,861.20 | 3.35% |
| BATAAN SAVINGS AND LOAN BANK | 1,808,578.20 | 58,266,576.10 | 3.10% |
| RIZAL COMM'L BANKING CORP | 1,913,419,749.01 | 62,605,257,771.28 | 3.06% |
| MERCHANTS SAVINGS & LOAN ASSN INC | 15,291,332.84 | 623,919,318.51 | 2.45% |
| AL-AMANAH ISLAMIC INVESTMENT BANK OF THE PHILS | 6,509,512.97 | 298,726,619.97 | 2.18% |
| SECURITY BANK CORP | 1,956,583,647.77 | 96,540,680,277.62 | 2.03% |
| METROPOLITAN BANK & TCO | 3,683,099,014.74 | 187,399,541,656.32 | 1.97% |
| KEB HANA BANK - MANILA BRANCH | 28,022,199.88 | 1,641,319,668.78 | 1.71% |
| BANGKOK BANK PUBLIC CO LTD | 43,936,941.43 | 3,164,745,771.55 | 1.39% |
| QUEZON COCONUT BANK INC (A THRIFT BANK) | 440,570.84 | 58,788,484.15 | 0.75% |
| ING BANK N.V. | 101.44 | 2,462,697,042.68 | 0.00% |
| BANK OF AMERICA N.A. | 0.00 | 2,091,322,952.20 | 0.00% |
| BDO PRIVATE BANK, INC. | 0.00 | 5,143,261,112.34 | 0.00% |
| CATHAY UNITED BANK CO LTD - MANILA BRANCH | 0.00 | 2,114,994,246.49 | 0.00% |
| DEUTSCHE BANK AG | 0.00 | 3,115,188,633.13 | 0.00% |
| FIRST COMMERCIAL BANK LTD MANILA BRANCH | 0.00 | 2,061,230,424.92 | 0.00% |
| INDUSTRIAL BANK OF KOREA MANILA BRANCH | 0.00 | 2,198,377,005.93 | 0.00% |
| ISLA BANK(A THRIFT BANK) INC | 0.00 | 664,937,840.86 | 0.00% |
| JP MORGAN CHASE BANK NATIONAL ASSN. | 0.00 | 1,387,778,439.51 | 0.00% |
| MEGA INT'L COMM'L BANK CO LTD | 0.00 | 1,841,609,590.34 | 0.00% |
| MIZUHO BANK LTD - MANILA BRANCH | 0.00 | 5,512,514,270.26 | 0.00% |
| SHINHAN BANK - MANILA BRANCH | 0.00 | 2,168,774,838.27 | 0.00% |
| SUMITOMO MITSUI BANKING CORPORATION-MANILA BRANCH | 0.00 | 12,851,999,724.51 | 0.00% |
| THE BNK OF TOKYO-MITSUBISHI UFJ LTD | 0.00 | 4,679,489,410.20 | 0.00% |
| Grand Total | 130,563,795,522.67 | 1,463,519,874,590.22 | 8.92% |
Are NPLs the Right Numbers to Look At?
In a financial crisis, a loan that is current can very well become past due, and a past due loan can become a non-performing loan, and a non-performing loan can become a loan write-off. The real number to look at are the loans that the banks and BSP already consider doubtful: Classified Loans.
Investopedia.com defines "Classified Loans" as:
"Any bank loan that is in danger of default. Classified loans have unpaid interest and principal outstanding, and it is unclear whether the bank will be able to recoup the loan proceeds from the borrower. Banks usually categorize such loans as adversely classified assets on their books."
The US Federal Deposit Insurance Corporation (FDIC), similar to our very own Philippine Deposit Insurance Corporation (PDIC), defines Classified Loans as:
"Loans classified Loss are considered uncollectible and of such little value that their continuance as bankable assets is not warranted. This classification does not mean that the loan has absolutely no recovery or salvage value but rather it is not practical or desirable to defer writing off this basically worthless asset even though partial recovery may be effected in the future."
In a financial crisis, a loan that is current can very well become past due, and a past due loan can become a non-performing loan, and a non-performing loan can become a loan write-off. The real number to look at are the loans that the banks and BSP already consider doubtful: Classified Loans.
Investopedia.com defines "Classified Loans" as:
"Any bank loan that is in danger of default. Classified loans have unpaid interest and principal outstanding, and it is unclear whether the bank will be able to recoup the loan proceeds from the borrower. Banks usually categorize such loans as adversely classified assets on their books."
The US Federal Deposit Insurance Corporation (FDIC), similar to our very own Philippine Deposit Insurance Corporation (PDIC), defines Classified Loans as:
"Loans classified Loss are considered uncollectible and of such little value that their continuance as bankable assets is not warranted. This classification does not mean that the loan has absolutely no recovery or salvage value but rather it is not practical or desirable to defer writing off this basically worthless asset even though partial recovery may be effected in the future."
In Circular #0247 dated May 19, 2000, BSP defines Classified Loans as loans which possess the following characteristics:
- Loans especially mentioned because they have potential weaknesses that deserve Management's close attention;
- Substandard Loans are loans which appear to involve a substantial and unreasonable degree of risk to the institution because of unfavorable record or unsatisfactory characteristics;
- Doubtful Loans are Substandard Loans with the added characteristics that existing facts, conditions, and values make collection or liquidation in full highly improbable and in which substantial loss is probable;
- Loss loans are loans that are considered uncollectible or worthless and are of such little value that their continuance as bankable assets is not warranted although the loans may have some recovery or salvage value.
- Loans Especially Mentioned: 5%
- Substandard - Secured: 6% - 25%
- Substandard - Unsecured: 25%
- Doubtful: 50%
- Loss: 100%
| Philippine Banking System | |||
| Classified Loans vs. NPLs | |||
| December 31, 2016 | |||
| Classified Loans/NPL | |||
| Bank | Classified Loans | Gross NPLs | (In %) |
| ING BANK N.V. | 40,000,000.00 | 101.44 | 39432176.66% |
| BANK OF CHINA LIMITED-MANILA BRANCH | 15,103,128,485.26 | 189,040,895.91 | 7989.34% |
| INTER-ASIA DEVELOPMENT BANK | 236,168,695.34 | 7,566,983.61 | 3121.04% |
| QUEZON COCONUT BANK INC (A THRIFT BANK) | 12,142,369.67 | 440,570.84 | 2756.05% |
| QUEEN CITY DEVELOPMENT BANK INC OR QUEENBANK A THRIFT BANK | 221,987,127.82 | 22,071,051.75 | 1005.78% |
| YUANTA SAVINGS BANK PHILIPPINES INC | 1,056,171,182.20 | 112,039,320.83 | 942.68% |
| BANK ONE SAVINGS AND TRUST CORP. | 204,239,198.39 | 23,101,952.55 | 884.08% |
| VILLAGE BANK INC (A THRIFT BANK) | 171,691,000.00 | 20,037,722.29 | 856.84% |
| CITIBANK, N.A. | 5,167,048,362.39 | 869,608,224.33 | 594.18% |
| KEB HANA BANK - MANILA BRANCH | 159,898,935.21 | 28,022,199.88 | 570.62% |
| DUMAGUETE CITY DEV BANK INC | 117,490,000.00 | 20,850,370.14 | 563.49% |
| BANGKO KABAYAN INC (A PRIVATE DEVELOPMENT BANK) | 221,605,766.24 | 39,444,210.03 | 561.82% |
| METROPOLITAN BANK & TCO | 19,945,341,081.96 | 3,683,099,014.74 | 541.54% |
| PHIL TRUST COMPANY | 5,784,000,000.00 | 1,172,897,983.43 | 493.14% |
| SECURITY BANK CORP | 9,018,000,000.00 | 1,956,583,647.77 | 460.91% |
| CORDILLERA SAVINGS BANK INC | 64,689,076.01 | 14,588,524.39 | 443.42% |
| BANK OF COMMERCE | 7,836,421,529.56 | 1,777,798,286.62 | 440.79% |
| RIZAL COMM'L BANKING CORP | 7,742,581,334.23 | 1,913,419,749.01 | 404.65% |
| PHIL NATIONAL BANK | 32,765,210,227.83 | 8,771,559,273.58 | 373.54% |
| CHINA BANKING CORP | 13,491,147,877.52 | 3,728,985,069.67 | 361.79% |
| BATAAN DEVELOPMENT BANK | 102,400,000.00 | 31,340,481.42 | 326.73% |
| ASIA UNITED BANK CORPORATION | 4,784,481,341.54 | 1,475,266,303.18 | 324.31% |
| METRO CEBU PUBLIC SAVINGS BANK | 66,150,726.24 | 21,100,005.39 | 313.51% |
| PHIL SAVINGS BANK | 14,149,535,551.21 | 4,531,110,557.04 | 312.28% |
| MALAYAN BANK SAVINGS AND MORT BANK INC | 1,680,015,585.65 | 574,727,293.20 | 292.32% |
| BDO UNIBANK INC | 46,117,189,189.88 | 15,854,555,894.59 | 290.88% |
| UNION BANK OF THE PHILS | 22,483,146,694.29 | 7,778,178,634.93 | 289.05% |
| MAYBANK PHILIPPINES INCORPORATED | 5,866,903,788.74 | 2,036,189,716.30 | 288.13% |
| UNITED COCONUT PLANTERS BANK | 17,194,349,897.69 | 5,989,286,726.79 | 287.09% |
| LAND BANK OF THE PHILIPPINES | 19,660,424,623.82 | 7,173,190,275.55 | 274.08% |
| CENTURY SAVINGS BANK CORPORATION | 85,057,345.70 | 34,734,041.96 | 244.88% |
| PHILIPPINE RESOURCES SAVINGS BANKING CORPORATION (PR SAVINGS | 2,284,053,366.60 | 955,755,336.48 | 238.98% |
| DEVELOPMENT BANK OF THE PHIL | 11,375,879,210.17 | 4,802,651,348.83 | 236.87% |
| UCPB SAVINGS BANK | 2,181,355,529.00 | 975,156,384.32 | 223.69% |
| ROBINSONS BANK CORPORATION | 1,526,179,000.00 | 691,088,663.30 | 220.84% |
| WORLD PARTNERS BANK (A THRIFT BANK) | 233,248,015.31 | 107,415,667.13 | 217.15% |
| AL-AMANAH ISLAMIC INVESTMENT BANK OF THE PHILS | 14,086,000.00 | 6,509,512.97 | 216.39% |
| PENBANK INC (A PDB) (FORMERLY: PENINSULA RB INC) | 296,385,376.07 | 146,519,151.74 | 202.28% |
| LEGAZPI SAVINGS BANK INC | 883,980,000.00 | 447,417,498.87 | 197.57% |
| BANK OF THE PHIL ISLANDS | 14,630,469,098.69 | 7,688,633,689.58 | 190.29% |
| RCBC SAVINGS BANK INC | 6,940,955,925.00 | 3,715,336,441.78 | 186.82% |
| PHILIPPINE BUSINESS BANK INC A SAVINGS BANK | 2,367,490,000.00 | 1,322,295,019.15 | 179.04% |
| PHILIPPINE VETERANS BANK | 3,271,497,966.53 | 1,898,738,872.12 | 172.30% |
| PHIL STAR DEVELOPMENT BANK INC | 32,992,244.19 | 19,238,385.28 | 171.49% |
| FIRST CONSOLIDATED BANK INC (A PDB) | 981,354,730.42 | 590,763,111.01 | 166.12% |
| DUNGGANON BANK (A MICROFINANCE THRIFT BANK) INC | 44,956,037.73 | 28,178,352.90 | 159.54% |
| PRODUCERS SAVINGS BANK CORPORATION | 494,118,240.10 | 311,505,684.33 | 158.62% |
| UNIVERSITY SAVINGS BANK INC | 112,414,705.89 | 72,145,206.72 | 155.82% |
| CHINA BANK SAVINGS INC | 6,532,320,468.89 | 4,293,974,170.33 | 152.13% |
| BPI FAMILY SAVINGS BANK INC | 11,133,243,024.45 | 7,497,941,572.20 | 148.48% |
| STERLING BANK OF ASIA INC (A SAVINGS BANK) | 1,313,560,000.00 | 936,700,031.78 | 140.23% |
| MARITIME SAVINGS BANK CORPORATION | 34,367,927.90 | 24,652,054.39 | 139.41% |
| BANK OF MAKATI (A SAVINGS BANK) INC | 3,007,263,665.45 | 2,243,073,464.02 | 134.07% |
| CTBC BANK (PHILIPPINES) CORP | 604,025,971.98 | 460,786,467.63 | 131.09% |
| OPTIMUM DEVELOPMENT BANK INC | 117,462,232.76 | 90,959,273.89 | 129.14% |
| PHIL POSTAL SAVINGS BANK INC | 2,577,567,462.70 | 2,105,663,775.71 | 122.41% |
| EQUICOM SAVINGS BANK INC | 731,313,376.49 | 601,715,967.86 | 121.54% |
| PNB SAVINGS BANK | 1,006,106,182.06 | 829,192,484.27 | 121.34% |
| CITY SAVINGS BANK INC | 1,747,962,369.63 | 1,530,120,230.40 | 114.24% |
| LUZON DEVELOPMENT BANK | 619,258,583.26 | 544,175,490.99 | 113.80% |
| BPI DIRECT BANKO INC A SAVINGS BANK | 583,639,711.06 | 547,319,743.95 | 106.64% |
| EAST WEST BANKING CORP | 8,692,840,178.42 | 8,227,387,109.25 | 105.66% |
| 1ST VALLEY BANK INC A DEVELOPMENT BANK | 364,645,536.93 | 346,548,011.68 | 105.22% |
| LIFE SAVINGS BANK INC | 14,820,094.54 | 14,205,894.15 | 104.32% |
| STANDARD CHARTERED BANK | 2,166,958,692.61 | 2,123,003,347.70 | 102.07% |
| LEMERY SAVINGS & LOAN BANK, INC. | 2,991,989.08 | 2,987,856.52 | 100.14% |
| BANGKOK BANK PUBLIC CO LTD | 43,936,941.43 | 43,936,941.43 | 100.00% |
| BATAAN SAVINGS AND LOAN BANK | 1,808,578.20 | 1,808,578.20 | 100.00% |
| HIYAS BANKING CORPORATION | 34,826,424.16 | 34,826,424.16 | 100.00% |
| MALASIQUI PROGRESSIVE SLB, INC | 12,713,229.25 | 12,713,229.25 | 100.00% |
| SUN SAVINGS BANK INC | 14,982,841.40 | 15,103,167.59 | 99.20% |
| PAMPANGA DEVELOPMENT BANK | 47,394,335.63 | 49,744,868.65 | 95.27% |
| WEALTH DEVELOPMENT BANK CORPORATION | 187,556,440.55 | 240,199,722.90 | 78.08% |
| HONGKONG & SHANGHAI BANKING CORP | 456,693,409.61 | 797,673,955.04 | 57.25% |
| PHIL BANK OF COMMUNICATIONS | 1,065,744,487.21 | 2,259,014,990.06 | 47.18% |
| HSBC SAVINGS BANK(PHILS) INC | 25,345,617.93 | 63,448,045.28 | 39.95% |
| ANZ BANKING GROUP LTD | 800,875.76 | 404,087,064.26 | 0.20% |
| BUSINESS AND CONSUMERS BANK (A DB) | 0.00 | 13,970,890.80 | 0.00% |
| CARD SME BANK INC A THRIFT BANK | 0.00 | 48,473,003.59 | 0.00% |
| CITYSTATE SAVINGS BANK INC | 0.00 | 119,756,629.16 | 0.00% |
| ENTERPRISE BANK INC (A THRIFT BANK) | 0.00 | 232,694,561.97 | 0.00% |
| FARMERS SAVINGS & LOAN BANK INC | 0.00 | 22,696,612.39 | 0.00% |
| MERCHANTS SAVINGS & LOAN ASSN INC | 0.00 | 15,291,332.84 | 0.00% |
| NORTHPOINT DEV'T BANK INC | 0.00 | 122,915,455.83 | 0.00% |
| THE PALAWAN BANK (PALAWAN DB) INC | 0.00 | 14,849,692.88 | 0.00% |
| BANK OF AMERICA N.A. | 2,184,000.00 | 0.00 | NA |
| BDO PRIVATE BANK, INC. | 0.00 | 0.00 | NA |
| CATHAY UNITED BANK CO LTD - MANILA BRANCH | 0.00 | 0.00 | NA |
| DEUTSCHE BANK AG | 0.00 | 0.00 | NA |
| FIRST COMMERCIAL BANK LTD MANILA BRANCH | 0.00 | 0.00 | NA |
| INDUSTRIAL BANK OF KOREA MANILA BRANCH | 0.00 | 0.00 | NA |
| ISLA BANK(A THRIFT BANK) INC | 0.00 | 0.00 | NA |
| JP MORGAN CHASE BANK NATIONAL ASSN. | 0.00 | 0.00 | NA |
| MEGA INT'L COMM'L BANK CO LTD | 531,088,408.21 | 0.00 | NA |
| MIZUHO BANK LTD - MANILA BRANCH | 251,875,357.82 | 0.00 | NA |
| SHINHAN BANK - MANILA BRANCH | 0.00 | 0.00 | NA |
| SUMITOMO MITSUI BANKING CORPORATION-MANILA BRANCH | 0.00 | 0.00 | NA |
| THE BNK OF TOKYO-MITSUBISHI UFJ LTD | 38,183,490.00 | 0.00 | NA |
| Grand Total | 343,185,514,345.46 | 130,563,795,522.67 | 262.85% |
This level of classified loans should be measured against the bank's "capital cushion" or its ability to absorb losses. Capital Cushion is normally defined as a bank's "Tangible Common Equity" plus its Loan Loss Reserves. Tangible Common Equity (TCE) refers to the subset of shareholders' equity that is not preferred equity and not intangible assets. So it excludes such items as Hybrid equity (like preferred shares) and goodwill.
By this measure, the level of "Classified Loans and other Risky Assets" amounts to Php 343.19 billion or 22.43% of the Php 1.53 trillion in Total Capital Cushion of Philippine Banks as of December 31, 2016.
| Philippine Banking System | |||
| Classified Loans as % of Total Capital Cushion | |||
| December 31, 2016 | |||
| Classified Loans | Total Capital Cushion | Classified Loans/Total Capital Cushion | |
| Bank | (In Php) | (In Php) | (In %) |
| BANK OF CHINA LIMITED-MANILA BRANCH | 15,103,128,485.26 | 2,672,347,692.15 | 565.16% |
| INTER-ASIA DEVELOPMENT BANK | 236,168,695.34 | 60,760,898.70 | 388.69% |
| UNITED COCONUT PLANTERS BANK | 17,194,349,897.69 | 8,061,344,680.37 | 213.29% |
| PHIL POSTAL SAVINGS BANK INC | 2,577,567,462.70 | 1,362,809,795.55 | 189.14% |
| VILLAGE BANK INC (A THRIFT BANK) | 171,691,000.00 | 98,485,627.30 | 174.33% |
| MALAYAN BANK SAVINGS AND MORT BANK INC | 1,680,015,585.65 | 1,283,661,051.68 | 130.88% |
| BATAAN DEVELOPMENT BANK | 102,400,000.00 | 96,657,335.55 | 105.94% |
| LEGAZPI SAVINGS BANK INC | 883,980,000.00 | 882,809,922.80 | 100.13% |
| WORLD PARTNERS BANK (A THRIFT BANK) | 233,248,015.31 | 234,701,101.62 | 99.38% |
| EQUICOM SAVINGS BANK INC | 731,313,376.49 | 758,995,198.35 | 96.35% |
| YUANTA SAVINGS BANK PHILIPPINES INC | 1,056,171,182.20 | 1,105,008,705.94 | 95.58% |
| LUZON DEVELOPMENT BANK | 619,258,583.26 | 658,520,505.27 | 94.04% |
| PHILIPPINE RESOURCES SAVINGS BANKING CORPORATION (PR SAVINGS | 2,284,053,366.60 | 2,476,919,001.92 | 92.21% |
| METRO CEBU PUBLIC SAVINGS BANK | 66,150,726.24 | 91,015,811.52 | 72.68% |
| CHINA BANK SAVINGS INC | 6,532,320,468.89 | 9,234,578,383.26 | 70.74% |
| PHIL SAVINGS BANK | 14,149,535,551.21 | 22,178,636,172.40 | 63.80% |
| UCPB SAVINGS BANK | 2,181,355,529.00 | 3,428,720,199.39 | 63.62% |
| RCBC SAVINGS BANK INC | 6,940,955,925.00 | 11,602,333,846.39 | 59.82% |
| PENBANK INC (A PDB) (FORMERLY: PENINSULA RB INC) | 296,385,376.07 | 550,531,931.42 | 53.84% |
| BANGKO KABAYAN INC (A PRIVATE DEVELOPMENT BANK) | 221,605,766.24 | 454,943,864.25 | 48.71% |
| MARITIME SAVINGS BANK CORPORATION | 34,367,927.90 | 71,452,966.96 | 48.10% |
| PHILIPPINE VETERANS BANK | 3,271,497,966.53 | 6,903,137,432.84 | 47.39% |
| DUMAGUETE CITY DEV BANK INC | 117,490,000.00 | 270,074,160.98 | 43.50% |
| CORDILLERA SAVINGS BANK INC | 64,689,076.01 | 148,912,543.90 | 43.44% |
| MAYBANK PHILIPPINES INCORPORATED | 5,866,903,788.74 | 13,538,862,099.91 | 43.33% |
| BANK OF COMMERCE | 7,836,421,529.56 | 18,193,111,829.37 | 43.07% |
| STERLING BANK OF ASIA INC (A SAVINGS BANK) | 1,313,560,000.00 | 3,126,545,761.22 | 42.01% |
| BANK OF MAKATI (A SAVINGS BANK) INC | 3,007,263,665.45 | 7,370,251,259.05 | 40.80% |
| UNIVERSITY SAVINGS BANK INC | 112,414,705.89 | 289,016,791.59 | 38.90% |
| BPI FAMILY SAVINGS BANK INC | 11,133,243,024.45 | 28,771,568,606.47 | 38.70% |
| DUNGGANON BANK (A MICROFINANCE THRIFT BANK) INC | 44,956,037.73 | 121,524,055.84 | 36.99% |
| UNION BANK OF THE PHILS | 22,483,146,694.29 | 62,809,305,314.47 | 35.80% |
| BANK ONE SAVINGS AND TRUST CORP. | 204,239,198.39 | 575,561,384.50 | 35.49% |
| QUEEN CITY DEVELOPMENT BANK INC OR QUEENBANK A THRIFT BANK | 221,987,127.82 | 681,047,909.21 | 32.59% |
| PHIL STAR DEVELOPMENT BANK INC | 32,992,244.19 | 101,975,258.53 | 32.35% |
| PAMPANGA DEVELOPMENT BANK | 47,394,335.63 | 154,884,142.04 | 30.60% |
| PRODUCERS SAVINGS BANK CORPORATION | 494,118,240.10 | 1,617,773,988.39 | 30.54% |
| CITIBANK, N.A. | 5,167,048,362.39 | 17,086,459,291.36 | 30.24% |
| BPI DIRECT BANKO INC A SAVINGS BANK | 583,639,711.06 | 2,019,573,463.87 | 28.90% |
| PHIL NATIONAL BANK | 32,765,210,227.83 | 118,157,606,806.42 | 27.73% |
| STANDARD CHARTERED BANK | 2,166,958,692.61 | 8,180,830,061.99 | 26.49% |
| PHIL TRUST COMPANY | 5,784,000,000.00 | 23,130,994,453.97 | 25.01% |
| FIRST CONSOLIDATED BANK INC (A PDB) | 981,354,730.42 | 3,925,892,000.89 | 25.00% |
| LAND BANK OF THE PHILIPPINES | 19,660,424,623.82 | 78,898,242,798.67 | 24.92% |
| 1ST VALLEY BANK INC A DEVELOPMENT BANK | 364,645,536.93 | 1,509,636,707.55 | 24.15% |
| EAST WEST BANKING CORP | 8,692,840,178.42 | 36,402,000,855.23 | 23.88% |
| MEGA INT'L COMM'L BANK CO LTD | 531,088,408.21 | 2,231,943,410.87 | 23.79% |
| DEVELOPMENT BANK OF THE PHIL | 11,375,879,210.17 | 48,427,385,550.96 | 23.49% |
| PHILIPPINE BUSINESS BANK INC A SAVINGS BANK | 2,367,490,000.00 | 10,268,291,322.69 | 23.06% |
| LIFE SAVINGS BANK INC | 14,820,094.54 | 67,261,879.66 | 22.03% |
| MALASIQUI PROGRESSIVE SLB, INC | 12,713,229.25 | 59,092,503.42 | 21.51% |
| CHINA BANKING CORP | 13,491,147,877.52 | 64,449,112,327.99 | 20.93% |
| BDO UNIBANK INC | 46,117,189,189.88 | 222,129,864,926.92 | 20.76% |
| QUEZON COCONUT BANK INC (A THRIFT BANK) | 12,142,369.67 | 58,896,033.08 | 20.62% |
| CITY SAVINGS BANK INC | 1,747,962,369.63 | 8,488,295,958.79 | 20.59% |
| ASIA UNITED BANK CORPORATION | 4,784,481,341.54 | 24,213,265,697.34 | 19.76% |
| HIYAS BANKING CORPORATION | 34,826,424.16 | 181,272,201.82 | 19.21% |
| WEALTH DEVELOPMENT BANK CORPORATION | 187,556,440.55 | 1,391,408,552.86 | 13.48% |
| OPTIMUM DEVELOPMENT BANK INC | 117,462,232.76 | 872,676,014.05 | 13.46% |
| RIZAL COMM'L BANKING CORP | 7,742,581,334.23 | 61,237,910,163.72 | 12.64% |
| ROBINSONS BANK CORPORATION | 1,526,179,000.00 | 13,328,883,285.32 | 11.45% |
| KEB HANA BANK - MANILA BRANCH | 159,898,935.21 | 1,582,723,292.43 | 10.10% |
| PHIL BANK OF COMMUNICATIONS | 1,065,744,487.21 | 10,859,291,581.53 | 9.81% |
| SECURITY BANK CORP | 9,018,000,000.00 | 92,876,035,419.44 | 9.71% |
| METROPOLITAN BANK & TCO | 19,945,341,081.96 | 212,212,640,479.13 | 9.40% |
| BANK OF THE PHIL ISLANDS | 14,630,469,098.69 | 158,859,660,704.92 | 9.21% |
| CENTURY SAVINGS BANK CORPORATION | 85,057,345.70 | 969,488,170.41 | 8.77% |
| PNB SAVINGS BANK | 1,006,106,182.06 | 12,062,171,039.90 | 8.34% |
| CTBC BANK (PHILIPPINES) CORP | 604,025,971.98 | 7,571,131,213.35 | 7.98% |
| SUN SAVINGS BANK INC | 14,982,841.40 | 196,444,008.63 | 7.63% |
| MIZUHO BANK LTD - MANILA BRANCH | 251,875,357.82 | 5,749,964,606.89 | 4.38% |
| AL-AMANAH ISLAMIC INVESTMENT BANK OF THE PHILS | 14,086,000.00 | 354,263,955.59 | 3.98% |
| LEMERY SAVINGS & LOAN BANK, INC. | 2,991,989.08 | 81,920,093.91 | 3.65% |
| HONGKONG & SHANGHAI BANKING CORP | 456,693,409.61 | 13,976,676,208.74 | 3.27% |
| BATAAN SAVINGS AND LOAN BANK | 1,808,578.20 | 59,861,620.72 | 3.02% |
| ING BANK N.V. | 40,000,000.00 | 2,606,771,914.09 | 1.53% |
| HSBC SAVINGS BANK(PHILS) INC | 25,345,617.93 | 1,862,329,637.76 | 1.36% |
| BANGKOK BANK PUBLIC CO LTD | 43,936,941.43 | 3,464,889,177.00 | 1.27% |
| THE BNK OF TOKYO-MITSUBISHI UFJ LTD | 38,183,490.00 | 4,967,420,166.75 | 0.77% |
| BANK OF AMERICA N.A. | 2,184,000.00 | 2,123,761,205.20 | 0.10% |
| ANZ BANKING GROUP LTD | 800,875.76 | 4,502,641,749.66 | 0.02% |
| BDO PRIVATE BANK, INC. | 0.00 | 5,065,100,238.11 | 0.00% |
| BUSINESS AND CONSUMERS BANK (A DB) | 0.00 | 95,724,586.04 | 0.00% |
| CARD SME BANK INC A THRIFT BANK | 0.00 | 620,521,098.74 | 0.00% |
| CATHAY UNITED BANK CO LTD - MANILA BRANCH | 0.00 | 2,137,548,971.18 | 0.00% |
| CITYSTATE SAVINGS BANK INC | 0.00 | 756,794,369.28 | 0.00% |
| DEUTSCHE BANK AG | 0.00 | 2,127,918,284.06 | 0.00% |
| ENTERPRISE BANK INC (A THRIFT BANK) | 0.00 | 382,097,130.25 | 0.00% |
| FARMERS SAVINGS & LOAN BANK INC | 0.00 | 129,294,538.69 | 0.00% |
| FIRST COMMERCIAL BANK LTD MANILA BRANCH | 0.00 | 2,119,950,000.00 | 0.00% |
| INDUSTRIAL BANK OF KOREA MANILA BRANCH | 0.00 | 2,181,032,346.27 | 0.00% |
| ISLA BANK(A THRIFT BANK) INC | 0.00 | 666,976,418.68 | 0.00% |
| JP MORGAN CHASE BANK NATIONAL ASSN. | 0.00 | 1,406,989,114.78 | 0.00% |
| MERCHANTS SAVINGS & LOAN ASSN INC | 0.00 | 702,306,744.45 | 0.00% |
| NORTHPOINT DEV'T BANK INC | 0.00 | 424,608,422.63 | 0.00% |
| SHINHAN BANK - MANILA BRANCH | 0.00 | 2,205,330,996.00 | 0.00% |
| SUMITOMO MITSUI BANKING CORPORATION-MANILA BRANCH | 0.00 | 13,084,187,806.49 | 0.00% |
| THE PALAWAN BANK (PALAWAN DB) INC | 0.00 | 40,515,065.36 | 0.00% |
| Grand Total | 343,185,514,345.46 | 1,529,842,565,877.60 | 22.43% |
Stress Test Scenarios
Aggregate
So how will a 10%, 20%, 30%, 40%, and even 50% write-off of Classified Loans affect the Total Capital Cushion of the Philippine Banking System?
In the aggregate, if Classified Loans amount to 22.43% of the banking system's Total Capital Cushion, then it follows that a 10% write-off of Classified Loans will reduce the total capital by 2.24% and a 50% write-off of classified loans will reduce the banking system's Total Capital Cushion by 11.22%.
Individual Banks
A 10% write-off of Classified Loans would severely impact (by 30% or more) the Total Capital Cushion of two banks (severely affected banks highlighted in yellow).
Aggregate
So how will a 10%, 20%, 30%, 40%, and even 50% write-off of Classified Loans affect the Total Capital Cushion of the Philippine Banking System?
In the aggregate, if Classified Loans amount to 22.43% of the banking system's Total Capital Cushion, then it follows that a 10% write-off of Classified Loans will reduce the total capital by 2.24% and a 50% write-off of classified loans will reduce the banking system's Total Capital Cushion by 11.22%.
Individual Banks
A 10% write-off of Classified Loans would severely impact (by 30% or more) the Total Capital Cushion of two banks (severely affected banks highlighted in yellow).
- Bank of China Limited - Manila Branch (56.52% reduction in Total Capital Cushion)
- Inter-Asia Development Bank (38.87% reduction in Total Capital Cushion)
A 20% write-off of Classified Loans will totally wipe out the Total Capital Cushion of one bank and severely impact the Total Capital Cushion of four more banks:
- Bank of China Limited - Manila Branch (113.03% reduction in Total Capital Cushion)
- Inter-Asia Development Bank (77.74% reduction in Total Capital Cushion)
- United Coconut Planters Bank (42.66% reduction in Total Capital Cushion)
- Philippine Postal Savings Bank Inc (37.83% reduction in Total Capital Cushion)
- Village Bank Inc (34.87% reduction in Total Capital Cushion)
A 30% write-off of Classified Loans will totally wipe out the Total Capital Cushion of two banks and severely affect (reduce by 30% or more) the Total Capital Cushion of six other banks:
- Bank of China Limited - Manila Branch (169.55% reduction in Total Capital Cushion)
- Inter-Asia Development Bank (116.61% reduction in Total Capital Cushion)
- United Coconut Planters Bank (63.99% reduction in Total Capital Cushion)
- Philippine Postal Savings Bank Inc (56.74% reduction in Total Capital Cushion)
- Village Bank Inc (52.30% reduction in Total Capital Cushion)
- Malayan Bank Savings and Mortgage Bank Inc (39.26% reduction in Total Capital Cushion)
- Bataan Development Bank (31.78% reduction in Total Capital Cushion)
- Legazpi Savings Bank Inc (30.04% reduction in Total Capital Cushion)
A 40% write-off of Classified Loans will totally wipe out the Total Capital Cushion of two banks and severely affect (reduce by 30% or more) the Total Capital Cushion of eleven more banks:
- Bank of China Limited - Manila Branch (226.07% reduction in Total Capital Cushion)
- Inter-Asia Development Bank (155.47% reduction in Total Capital Cushion)
- United Coconut Planters Bank (85.32% reduction in Total Capital Cushion)
- Philippine Postal Savings Bank Inc (75.65% reduction in Total Capital Cushion)
- Village Bank Inc (69.73% reduction in Total Capital Cushion)
- Malayan Bank Savings and Mortgage Bank Inc (41.37% reduction in Total Capital Cushion)
- Bataan Development Bank (42.38% reduction in Total Capital Cushion)
- Legazpi Savings Bank Inc (40.05% reduction in Total Capital Cushion)
- World Partners Bank (39.75% reduction in Total Capital Cushion)
- Equicom Savings Bank Inc (38.54% reduction in Total Capital Cushion)
- Yuanta Savings Bank Philippines Inc (38.23% reduction in Total Capital Cushion)
- Luzon Development Bank (37.62% reduction in Total Capital Cushion)
- Philippine Resources Savings Banking Corporation (36.89% reduction in Total Capital Cushion)
A 50% write-off of Classified Loans will totally wipe out the Total Capital Cushion of three banks and severely affect (reduce by 30% or more) the Total Capital Cushion of fourteen more banks:
- Bank of China Limited - Manila Branch (282.58% reduction in Total Capital Cushion)
- Inter-Asia Development Bank (194.34% reduction in Total Capital Cushion)
- United Coconut Planters Bank (106.65% reduction in Total Capital Cushion)
- Philippine Postal Savings Bank Inc (94.57% reduction in Total Capital Cushion)
- Village Bank Inc (87.17% reduction in Total Capital Cushion)
- Malayan Bank Savings and Mortgage Bank Inc (65.44% reduction in Total Capital Cushion)
- Bataan Development Bank (52.97% reduction in Total Capital Cushion)
- Legazpi Savings Bank Inc (50.07% reduction in Total Capital Cushion)
- World Partners Bank (49.69% reduction in Total Capital Cushion)
- Equicom Savings Bank Inc (48.18% reduction in Total Capital Cushion)
- Yuanta Savings Bank Philippines Inc (47.79% reduction in Total Capital Cushion)
- Luzon Development Bank (47.02% reduction in Total Capital Cushion)
- Philippine Resources Savings Banking Corporation (46.11% reduction in Total Capital Cushion)
- Metro Cebu Public Savings Bank (36.34% reduction in Total Capital Cushion)
- China Bank Savings Inc (35.37% reduction in Total Capital Cushion)
- Philippine Savings Bank (31.90% reduction in Total Capital Cushion)
- UCPB Savings Bank (31.81% reduction in Total Capital Cushion)
Source: www.bsp.gov.ph
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