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 217.88 billion or 1.58% of the Php 13,777.29 billion in assets held in the Philippine Banking System as of March 31, 2017).
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 139.25 billion or 8.97% of the PhP 1,552.38 billion in Stockholders Equity (SE) as of March 31, 2017. 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 March 31, 2017).
The stockholder's equity of seven banks would be severely affected. These banks are:
- Philippine Postal Savings Bank Inc (132.39% decline in SE)
- World Partners Bank (130.76% decline in SE)
- Luzon Development Bank (89.87% decline in SE)
- Enterprise Bank Inc (45.46% decline in SE)
- Equicom Savings Bank (43.55% decline in SE)
- Legazpi Savings Bank Inc (43.04% decline in SE)
- Maritime Savings Bank Corporation (33.20% decline in SE)
| Philippine Banking System | |||
| NPL as % of SE | |||
| March 31, 2017 | |||
| NPL | SE | NPL/SE | |
| Bank | (In PHP) | (In PHP) | (In %) |
| PHIL POSTAL SAVINGS BANK INC | 2,526,517,914.79 | 954,200,832.74 | 264.78% |
| WORLD PARTNERS BANK (A THRIFT BANK) | 112,362,449.20 | 42,964,068.18 | 261.53% |
| LUZON DEVELOPMENT BANK | 620,878,345.67 | 345,425,448.65 | 179.74% |
| ENTERPRISE BANK INC (A THRIFT BANK) | 252,043,502.46 | 277,185,285.45 | 90.93% |
| EQUICOM SAVINGS BANK INC | 646,533,823.35 | 742,357,199.11 | 87.09% |
| LEGAZPI SAVINGS BANK INC | 445,995,447.33 | 518,168,423.03 | 86.07% |
| MARITIME SAVINGS BANK CORPORATION | 24,499,153.86 | 36,899,584.35 | 66.39% |
| MALAYAN BANK SAVINGS AND MORT BANK INC | 565,547,649.98 | 1,021,229,750.21 | 55.38% |
| PHILIPPINE RESOURCES SAVINGS BANKING CORPORATION (PR SAVINGS BANK) | 980,710,424.09 | 1,922,167,223.77 | 51.02% |
| CHINA BANK SAVINGS INC | 4,410,355,252.20 | 9,163,202,511.71 | 48.13% |
| PHILIPPINE VETERANS BANK | 1,875,995,021.68 | 4,046,296,276.43 | 46.36% |
| UCPB SAVINGS BANK | 1,254,581,397.45 | 2,819,058,997.52 | 44.50% |
| THE PALAWAN BANK (PALAWAN DB) INC | 16,672,400.66 | 39,837,931.33 | 41.85% |
| RCBC SAVINGS BANK INC | 4,431,477,476.10 | 10,695,425,583.02 | 41.43% |
| PAMPANGA DEVELOPMENT BANK | 55,028,244.04 | 135,300,585.57 | 40.67% |
| METRO CEBU PUBLIC SAVINGS BANK | 24,372,080.98 | 61,356,495.52 | 39.72% |
| STERLING BANK OF ASIA INC (A SAVINGS BANK) | 942,498,137.44 | 2,562,739,122.29 | 36.78% |
| UNITED COCONUT PLANTERS BANK | 6,385,518,030.66 | 17,451,124,244.88 | 36.59% |
| PENBANK INC (A PDB) (FORMERLY: PENINSULA RB INC) | 168,397,257.81 | 462,780,457.04 | 36.39% |
| BATAAN DEVELOPMENT BANK | 27,407,967.11 | 77,568,284.11 | 35.33% |
| BANK OF MAKATI (A SAVINGS BANK) INC | 2,272,945,790.64 | 6,556,445,019.72 | 34.67% |
| CITYSTATE SAVINGS BANK INC | 221,868,254.68 | 692,872,698.83 | 32.02% |
| STANDARD CHARTERED BANK | 2,124,976,632.70 | 6,667,508,845.95 | 31.87% |
| NORTHPOINT DEV'T BANK INC | 99,959,947.40 | 344,690,779.53 | 29.00% |
| BPI FAMILY SAVINGS BANK INC | 7,729,608,998.38 | 26,770,809,993.57 | 28.87% |
| 1ST VALLEY BANK INC A DEVELOPMENT BANK | 428,729,538.30 | 1,488,039,794.90 | 28.81% |
| PHIL SAVINGS BANK | 4,666,176,343.64 | 19,291,936,376.39 | 24.19% |
| BPI DIRECT BANKO INC A SAVINGS BANK | 429,252,061.73 | 1,808,195,890.33 | 23.74% |
| PRODUCERS SAVINGS BANK CORPORATION | 386,138,239.27 | 1,644,599,363.96 | 23.48% |
| EAST WEST BANKING CORP | 8,291,599,642.55 | 35,333,154,415.37 | 23.47% |
| VILLAGE BANK INC (A THRIFT BANK) | 19,616,446.39 | 84,544,831.29 | 23.20% |
| PHIL BANK OF COMMUNICATIONS | 2,279,691,946.18 | 10,278,350,767.42 | 22.18% |
| MALASIQUI PROGRESSIVE SLB, INC | 11,106,429.25 | 52,213,426.23 | 21.27% |
| HIYAS BANKING CORPORATION | 34,360,654.43 | 162,196,397.10 | 21.18% |
| WEALTH DEVELOPMENT BANK CORPORATION | 292,932,364.95 | 1,428,158,118.24 | 20.51% |
| OPTIMUM DEVELOPMENT BANK INC | 174,457,924.11 | 862,100,904.11 | 20.24% |
| LIFE SAVINGS BANK INC | 12,898,716.79 | 66,685,537.96 | 19.34% |
| FARMERS SAVINGS & LOAN BANK INC | 22,411,351.29 | 123,861,508.80 | 18.09% |
| BUSINESS AND CONSUMERS BANK (A DB) | 14,191,495.90 | 87,093,685.39 | 16.29% |
| CITY SAVINGS BANK INC | 1,760,688,973.83 | 11,258,212,430.01 | 15.64% |
| PHIL STAR DEVELOPMENT BANK INC | 13,667,597.78 | 95,600,562.55 | 14.30% |
| PHILIPPINE BUSINESS BANK INC A SAVINGS BANK | 1,387,192,466.80 | 9,865,174,936.23 | 14.06% |
| MAYBANK PHILIPPINES INCORPORATED | 1,661,195,995.76 | 11,942,769,431.31 | 13.91% |
| FIRST CONSOLIDATED BANK INC (A PDB) | 525,049,637.72 | 3,921,398,077.44 | 13.39% |
| UNION BANK OF THE PHILS | 7,993,445,459.90 | 62,091,195,752.80 | 12.87% |
| ASIA UNITED BANK CORPORATION | 2,937,364,441.27 | 24,339,526,209.83 | 12.07% |
| CENTURY SAVINGS BANK CORPORATION | 117,161,921.87 | 977,594,202.51 | 11.98% |
| CORDILLERA SAVINGS BANK INC | 16,446,654.05 | 137,922,232.19 | 11.92% |
| DEVELOPMENT BANK OF THE PHIL | 5,464,419,478.74 | 45,934,092,718.50 | 11.90% |
| BANK OF COMMERCE | 1,799,079,182.21 | 15,153,876,740.35 | 11.87% |
| YUANTA SAVINGS BANK PHILIPPINES INC | 110,104,219.27 | 984,463,916.70 | 11.18% |
| UNIVERSITY SAVINGS BANK INC | 45,003,866.22 | 413,430,545.96 | 10.89% |
| SUN SAVINGS BANK INC | 18,959,809.67 | 186,900,409.10 | 10.14% |
| ANZ BANKING GROUP LTD | 404,087,064.26 | 4,104,226,806.61 | 9.85% |
| LEMERY SAVINGS & LOAN BANK, INC. | 7,700,249.95 | 78,452,926.42 | 9.82% |
| LAND BANK OF THE PHILIPPINES | 8,258,481,213.76 | 88,633,984,423.30 | 9.32% |
| PHIL NATIONAL BANK | 9,094,274,085.32 | 102,462,349,335.36 | 8.88% |
| PNB SAVINGS BANK | 1,015,744,779.07 | 11,591,387,229.87 | 8.76% |
| BANGKO KABAYAN INC (A PRIVATE DEVELOPMENT BANK) | 36,229,903.75 | 450,501,970.48 | 8.04% |
| BANK OF CHINA LIMITED-MANILA BRANCH | 188,969,213.72 | 2,441,975,318.50 | 7.74% |
| CARD SME BANK INC A THRIFT BANK | 55,309,326.70 | 730,971,718.18 | 7.57% |
| INTER-ASIA DEVELOPMENT BANK | 4,613,153.85 | 63,960,230.92 | 7.21% |
| DUMAGUETE CITY DEV BANK INC | 17,886,472.35 | 262,559,613.94 | 6.81% |
| CHINA BANKING CORP | 3,614,348,811.57 | 59,031,464,070.10 | 6.12% |
| CITIBANK, N.A. | 850,812,713.59 | 14,095,242,099.44 | 6.04% |
| BDO UNIBANK INC | 16,529,874,745.48 | 281,630,888,488.73 | 5.87% |
| ROBINSONS BANK CORPORATION | 683,406,976.50 | 12,115,260,786.73 | 5.64% |
| HONGKONG & SHANGHAI BANKING CORP | 746,769,210.95 | 13,344,344,650.98 | 5.60% |
| CTBC BANK (PHILIPPINES) CORP | 357,499,065.12 | 6,943,609,350.32 | 5.15% |
| BANK OF THE PHIL ISLANDS | 8,425,699,430.98 | 167,104,837,324.17 | 5.04% |
| PHIL TRUST COMPANY | 1,138,050,603.05 | 24,035,572,042.30 | 4.73% |
| RIZAL COMM'L BANKING CORP | 2,570,930,099.09 | 63,296,711,382.13 | 4.06% |
| QUEEN CITY DEVELOPMENT BANK INC OR QUEENBANK A THRIFT BANK | 26,305,413.66 | 654,099,419.31 | 4.02% |
| BANK ONE SAVINGS AND TRUST CORP. | 23,096,226.26 | 580,064,633.75 | 3.98% |
| BATAAN SAVINGS AND LOAN BANK | 1,635,781.28 | 57,924,599.63 | 2.82% |
| MERCHANTS SAVINGS & LOAN ASSN INC | 17,112,936.55 | 622,416,521.47 | 2.75% |
| SECURITY BANK CORP | 2,209,369,283.42 | 98,491,544,960.42 | 2.24% |
| METROPOLITAN BANK & TCO | 3,755,149,756.43 | 189,844,343,707.17 | 1.98% |
| AL-AMANAH ISLAMIC INVESTMENT BANK OF THE PHILS | 5,387,619.28 | 286,499,778.84 | 1.88% |
| KEB HANA BANK - MANILA BRANCH | 28,066,201.64 | 1,587,936,331.22 | 1.77% |
| QUEZON COCONUT BANK INC (A THRIFT BANK) | 764,046.72 | 59,014,544.28 | 1.29% |
| BANGKOK BANK PUBLIC CO LTD | 37,877,890.77 | 3,098,933,162.94 | 1.22% |
| ING BANK N.V. | 102.32 | 2,502,824,099.02 | 0.00% |
| BANK OF AMERICA N.A. | 0.00 | 2,096,035,697.20 | 0.00% |
| BDO PRIVATE BANK, INC. | 0.00 | 5,410,232,810.34 | 0.00% |
| CATHAY UNITED BANK CO LTD - MANILA BRANCH | 0.00 | 2,130,401,780.67 | 0.00% |
| DEUTSCHE BANK AG | 0.00 | 2,257,001,851.98 | 0.00% |
| FIRST COMMERCIAL BANK LTD MANILA BRANCH | 0.00 | 2,031,188,854.41 | 0.00% |
| INDUSTRIAL BANK OF KOREA MANILA BRANCH | 0.00 | 2,222,941,066.65 | 0.00% |
| ISLA BANK(A THRIFT BANK) INC | 0.00 | 667,526,085.03 | 0.00% |
| JP MORGAN CHASE BANK NATIONAL ASSN. | 0.00 | 1,318,053,765.87 | 0.00% |
| MEGA INT'L COMM'L BANK CO LTD | 0.00 | 1,861,262,054.27 | 0.00% |
| MIZUHO BANK LTD - MANILA BRANCH | 0.00 | 5,574,888,253.17 | 0.00% |
| SHINHAN BANK - MANILA BRANCH | 0.00 | 2,201,303,656.55 | 0.00% |
| SUMITOMO MITSUI BANKING CORPORATION-MANILA BRANCH | 0.00 | 13,001,887,788.35 | 0.00% |
| THE BNK OF TOKYO-MITSUBISHI UFJ LTD | 0.00 | 4,580,114,852.15 | 0.00% |
| UNITED OVERSEAS BANK LIMITED MANILA BRANCH | 0.00 | 2,412,646,568.87 | 0.00% |
| MICROFINANCE MAXIMUM SB INC | 11,538,108.54 | -10,270,099.95 | -112.35% |
| Grand Total | 139,247,084,946.46 | 1,552,380,021,337.57 | 8.97% |
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 | |||
| March 31, 2017 | |||
| Classified Loans/NPL | |||
| Bank | Classified Loans | Gross NPLs | (In %) |
| ING BANK N.V. | 30,000,000.00 | 102.32 | 29319781.08% |
| BANK OF CHINA LIMITED-MANILA BRANCH | 16,279,051,512.77 | 188,969,213.72 | 8614.66% |
| INTER-ASIA DEVELOPMENT BANK | 248,961,155.00 | 4,613,153.85 | 5396.77% |
| QUEZON COCONUT BANK INC (A THRIFT BANK) | 13,296,687.24 | 764,046.72 | 1740.30% |
| ROBINSONS BANK CORPORATION | 7,399,721,000.00 | 683,406,976.50 | 1082.77% |
| YUANTA SAVINGS BANK PHILIPPINES INC | 1,177,923,196.08 | 110,104,219.27 | 1069.83% |
| BANK ONE SAVINGS AND TRUST CORP. | 211,776,802.54 | 23,096,226.26 | 916.93% |
| VILLAGE BANK INC (A THRIFT BANK) | 171,691,000.00 | 19,616,446.39 | 875.24% |
| QUEEN CITY DEVELOPMENT BANK INC OR QUEENBANK A THRIFT BANK | 223,630,937.63 | 26,305,413.66 | 850.13% |
| DUMAGUETE CITY DEV BANK INC | 128,333,200.58 | 17,886,472.35 | 717.49% |
| PHIL TRUST COMPANY | 7,695,000,000.00 | 1,138,050,603.05 | 676.16% |
| BANGKO KABAYAN INC (A PRIVATE DEVELOPMENT BANK) | 220,917,762.55 | 36,229,903.75 | 609.77% |
| KEB HANA BANK - MANILA BRANCH | 146,061,987.74 | 28,066,201.64 | 520.42% |
| BANK OF COMMERCE | 8,733,341,364.12 | 1,799,079,182.21 | 485.43% |
| METROPOLITAN BANK & TCO | 17,518,898,738.49 | 3,755,149,756.43 | 466.53% |
| CITIBANK, N.A. | 3,640,116,299.87 | 850,812,713.59 | 427.84% |
| SECURITY BANK CORP | 9,018,000,000.00 | 2,209,369,283.42 | 408.17% |
| BATAAN DEVELOPMENT BANK | 102,400,000.00 | 27,407,967.11 | 373.61% |
| CHINA BANKING CORP | 12,857,852,127.70 | 3,614,348,811.57 | 355.74% |
| CORDILLERA SAVINGS BANK INC | 58,369,467.39 | 16,446,654.05 | 354.90% |
| PHIL NATIONAL BANK | 31,117,271,203.83 | 9,094,274,085.32 | 342.16% |
| MAYBANK PHILIPPINES INCORPORATED | 5,529,372,467.16 | 1,661,195,995.76 | 332.85% |
| UNIVERSITY SAVINGS BANK INC | 140,047,123.16 | 45,003,866.22 | 311.19% |
| MALAYAN BANK SAVINGS AND MORT BANK INC | 1,730,590,795.34 | 565,547,649.98 | 306.00% |
| UNION BANK OF THE PHILS | 24,448,609,028.56 | 7,993,445,459.90 | 305.86% |
| PHIL SAVINGS BANK | 14,064,980,690.81 | 4,666,176,343.64 | 301.42% |
| METRO CEBU PUBLIC SAVINGS BANK | 69,873,900.28 | 24,372,080.98 | 286.70% |
| RIZAL COMM'L BANKING CORP | 7,275,070,052.17 | 2,570,930,099.09 | 282.97% |
| BDO UNIBANK INC | 45,944,748,586.32 | 16,529,874,745.48 | 277.95% |
| UNITED COCONUT PLANTERS BANK | 17,194,349,897.69 | 6,385,518,030.66 | 269.27% |
| AL-AMANAH ISLAMIC INVESTMENT BANK OF THE PHILS | 14,086,000.00 | 5,387,619.28 | 261.45% |
| LAND BANK OF THE PHILIPPINES | 20,316,296,990.17 | 8,258,481,213.76 | 246.01% |
| PHILIPPINE RESOURCES SAVINGS BANKING CORPORATION (PR SAVINGS BANK) | 2,305,455,320.91 | 980,710,424.09 | 235.08% |
| WORLD PARTNERS BANK (A THRIFT BANK) | 233,248,015.31 | 112,362,449.20 | 207.59% |
| ASIA UNITED BANK CORPORATION | 5,870,585,956.47 | 2,937,364,441.27 | 199.86% |
| LEGAZPI SAVINGS BANK INC | 883,980,000.00 | 445,995,447.33 | 198.20% |
| DEVELOPMENT BANK OF THE PHIL | 10,789,223,948.04 | 5,464,419,478.74 | 197.45% |
| PHIL STAR DEVELOPMENT BANK INC | 26,922,007.94 | 13,667,597.78 | 196.98% |
| PHILIPPINE VETERANS BANK | 3,486,613,522.42 | 1,875,995,021.68 | 185.85% |
| PENBANK INC (A PDB) (FORMERLY: PENINSULA RB INC) | 306,709,326.96 | 168,397,257.81 | 182.13% |
| FIRST CONSOLIDATED BANK INC (A PDB) | 952,700,667.65 | 525,049,637.72 | 181.45% |
| UCPB SAVINGS BANK | 2,181,355,529.00 | 1,254,581,397.45 | 173.87% |
| BANK OF THE PHIL ISLANDS | 14,421,243,615.42 | 8,425,699,430.98 | 171.16% |
| PHILIPPINE BUSINESS BANK INC A SAVINGS BANK | 2,367,490,000.00 | 1,387,192,466.80 | 170.67% |
| RCBC SAVINGS BANK INC | 6,940,955,925.00 | 4,431,477,476.10 | 156.63% |
| CHINA BANK SAVINGS INC | 6,731,417,361.15 | 4,410,355,252.20 | 152.63% |
| MARITIME SAVINGS BANK CORPORATION | 37,130,657.86 | 24,499,153.86 | 151.56% |
| CTBC BANK (PHILIPPINES) CORP | 534,693,605.84 | 357,499,065.12 | 149.57% |
| BPI FAMILY SAVINGS BANK INC | 10,918,914,754.04 | 7,729,608,998.38 | 141.26% |
| LIFE SAVINGS BANK INC | 17,512,163.62 | 12,898,716.79 | 135.77% |
| BANK OF MAKATI (A SAVINGS BANK) INC | 2,977,949,117.72 | 2,272,945,790.64 | 131.02% |
| PRODUCERS SAVINGS BANK CORPORATION | 494,118,240.10 | 386,138,239.27 | 127.96% |
| PHIL POSTAL SAVINGS BANK INC | 3,207,201,326.40 | 2,526,517,914.79 | 126.94% |
| PNB SAVINGS BANK | 1,246,507,690.93 | 1,015,744,779.07 | 122.72% |
| BPI DIRECT BANKO INC A SAVINGS BANK | 519,601,077.18 | 429,252,061.73 | 121.05% |
| EQUICOM SAVINGS BANK INC | 772,828,274.78 | 646,533,823.35 | 119.53% |
| OPTIMUM DEVELOPMENT BANK INC | 204,039,798.99 | 174,457,924.11 | 116.96% |
| CENTURY SAVINGS BANK CORPORATION | 136,054,603.51 | 117,161,921.87 | 116.13% |
| STERLING BANK OF ASIA INC (A SAVINGS BANK) | 1,080,783,000.00 | 942,498,137.44 | 114.67% |
| CITY SAVINGS BANK INC | 1,967,614,331.37 | 1,760,688,973.83 | 111.75% |
| LUZON DEVELOPMENT BANK | 662,154,665.50 | 620,878,345.67 | 106.65% |
| EAST WEST BANKING CORP | 8,692,840,178.42 | 8,291,599,642.55 | 104.84% |
| 1ST VALLEY BANK INC A DEVELOPMENT BANK | 447,623,271.20 | 428,729,538.30 | 104.41% |
| NORTHPOINT DEV'T BANK INC | 102,839,228.57 | 99,959,947.40 | 102.88% |
| STANDARD CHARTERED BANK | 2,168,529,703.48 | 2,124,976,632.70 | 102.05% |
| LEMERY SAVINGS & LOAN BANK, INC. | 7,706,907.84 | 7,700,249.95 | 100.09% |
| BANGKOK BANK PUBLIC CO LTD | 37,877,890.77 | 37,877,890.77 | 100.00% |
| BATAAN SAVINGS AND LOAN BANK | 1,635,781.28 | 1,635,781.28 | 100.00% |
| HIYAS BANKING CORPORATION | 34,360,654.43 | 34,360,654.43 | 100.00% |
| MALASIQUI PROGRESSIVE SLB, INC | 11,106,429.25 | 11,106,429.25 | 100.00% |
| SUN SAVINGS BANK INC | 18,294,765.36 | 18,959,809.67 | 96.49% |
| PAMPANGA DEVELOPMENT BANK | 51,802,617.57 | 55,028,244.04 | 94.14% |
| WEALTH DEVELOPMENT BANK CORPORATION | 174,873,766.38 | 292,932,364.95 | 59.70% |
| PHIL BANK OF COMMUNICATIONS | 1,208,974,290.46 | 2,279,691,946.18 | 53.03% |
| HONGKONG & SHANGHAI BANKING CORP | 333,592,923.25 | 746,769,210.95 | 44.67% |
| ANZ BANKING GROUP LTD | 246,404.86 | 404,087,064.26 | 0.06% |
| BUSINESS AND CONSUMERS BANK (A DB) | 0.00 | 14,191,495.90 | 0.00% |
| CARD SME BANK INC A THRIFT BANK | 0.00 | 55,309,326.70 | 0.00% |
| CITYSTATE SAVINGS BANK INC | 0.00 | 221,868,254.68 | 0.00% |
| ENTERPRISE BANK INC (A THRIFT BANK) | 0.00 | 252,043,502.46 | 0.00% |
| FARMERS SAVINGS & LOAN BANK INC | 0.00 | 22,411,351.29 | 0.00% |
| MERCHANTS SAVINGS & LOAN ASSN INC | 0.00 | 17,112,936.55 | 0.00% |
| MICROFINANCE MAXIMUM SB INC | 0.00 | 11,538,108.54 | 0.00% |
| THE PALAWAN BANK (PALAWAN DB) INC | 0.00 | 16,672,400.66 | 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 | 364,681,701.01 | 0.00 | NA |
| MIZUHO BANK LTD - MANILA BRANCH | 238,072,677.39 | 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 | 35,862,400.00 | 0.00 | NA |
| UNITED OVERSEAS BANK LIMITED MANILA BRANCH | 0.00 | 0.00 | NA |
| Grand Total | 349,928,750,070.82 | 139,247,084,946.46 | 251.30% |
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 349.93 billion or 20.66% of the Php 1.69 trillion in Total Capital Cushion of Philippine Banks as of March 31, 2017.
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 20.66% 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 2.07% and a 50% write-off of classified loans will reduce the banking system's Total Capital Cushion by 10.33%.
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 20.66% 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 2.07% and a 50% write-off of classified loans will reduce the banking system's Total Capital Cushion by 10.33%.
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 (60.60% reduction in Total Capital Cushion)
- Inter-Asia Development Bank (37.34% 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 five more banks:
- Bank of China Limited - Manila Branch (121.20% reduction in Total Capital Cushion)
- Inter-Asia Development Bank (74.69% reduction in Total Capital Cushion)
- Philippine Postal Savings Bank Inc (46.26% reduction in Total Capital Cushion)
- World Partners Bank (45.45% reduction in Total Capital Cushion)
- Village Bank Inc (33.11% reduction in Total Capital Cushion)
- United Coconut Planters Bank (32.63% 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 eight other banks:
- Bank of China Limited - Manila Branch (181.80% reduction in Total Capital Cushion)
- Inter-Asia Development Bank (112.03% reduction in Total Capital Cushion)
- Philippine Postal Savings Bank Inc (69.40% reduction in Total Capital Cushion)
- World Partners Bank (68.18% reduction in Total Capital Cushion)
- Village Bank Inc (49.67% reduction in Total Capital Cushion)
- United Coconut Planters Bank (48.94% reduction in Total Capital Cushion)
- Malayan Bank Savings and Mort Bank (40.69% reduction in Total Capital Cushion)
- Luzon Development Bank (38.06% reduction in Total Capital Cushion)
- Yuanta Savings Bank Philippines Inc (31.88% reduction in Total Capital Cushion)
- Bataan Development Bank (30.89% 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 fourteen more banks:
- Bank of China Limited - Manila Branch (242.40% reduction in Total Capital Cushion)
- Inter-Asia Development Bank (149.37% reduction in Total Capital Cushion)
- Philippine Postal Savings Bank Inc (92.53% reduction in Total Capital Cushion)
- World Partners Bank (90.91% reduction in Total Capital Cushion)
- Village Bank Inc (66.22% reduction in Total Capital Cushion)
- United Coconut Planters Bank (65.25% reduction in Total Capital Cushion)
- Malayan Bank Savings and Mort Bank (54.26% reduction in Total Capital Cushion)
- Luzon Development Bank (50.75% reduction in Total Capital Cushion)
- Yuanta Savings Bank Philippines Inc (42.51% reduction in Total Capital Cushion)
- Bataan Development Bank (41.19% reduction in Total Capital Cushion)
- Legazpi Savings Bank (39.29% reduction in Total Capital Cushion)
- Metro Cebu Public Savings Bank (35.55% reduction in Total Capital Cushion)
- Philippine Resources Savings Banking Corporation (34.97% reduction in Total Capital Cushion)
- Equicom Savings Bank (33.63% reduction in Total Capital Cushion)
- Maritime Savings Bank Corporation (33.59% reduction in Total Capital Cushion)
- China Bank Savings Inc (30.70% reduction in Total Capital Cushion)
A 50% write-off of Classified Loans will totally wipe out the Total Capital Cushion of four banks and severely affect (reduce by 30% or more) the Total Capital Cushion of thirteen more banks:
- Bank of China Limited - Manila Branch (303.00% reduction in Total Capital Cushion)
- Inter-Asia Development Bank (186.71% reduction in Total Capital Cushion)
- Philippine Postal Savings Bank Inc (115.66% reduction in Total Capital Cushion)
- World Partners Bank (113.64% reduction in Total Capital Cushion)
- Village Bank Inc (82.72% reduction in Total Capital Cushion)
- United Coconut Planters Bank (81.57% reduction in Total Capital Cushion)
- Malayan Bank Savings and Mort Bank (67.82% reduction in Total Capital Cushion)
- Luzon Development Bank (63.43% reduction in Total Capital Cushion)
- Yuanta Savings Bank Philippines Inc (53.14% reduction in Total Capital Cushion)
- Bataan Development Bank (51.49% reduction in Total Capital Cushion)
- Legazpi Savings Bank (49.12% reduction in Total Capital Cushion)
- Metro Cebu Public Savings Bank (44.44% reduction in Total Capital Cushion)
- Philippine Resources Savings Banking Corporation (43.71% reduction in Total Capital Cushion)
- Equicom Savings Bank (42.04% reduction in Total Capital Cushion)
- Maritime Savings Bank Corporation (41.99% reduction in Total Capital Cushion)
- China Bank Savings Inc (38.37% reduction in Total Capital Cushion)
- UCPB Savings Bank (31.88% reduction in Total Capital Cushion)
Source: www.bsp.gov.ph
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