Are Philippine Banks Under Provisioning Loan Losses? - As of September 30, 2017

Are Philippine banks under provisioning loan losses?

On the face of it, no.

At 1.42% as of September 30, 2017, NPLs as a percentage of Total Loan Portfolios are at historic lows.

 The NPL Coverage Ratio is near historic highs at 136.19% as of September 30, 2017.

However, NPLs can go much higher than current levels.  Over the past thirty-five years, NPLs as a percentage of Total Loan Portfolios averaged 8.16% for Philippine Universal and Commercial Banks. Moreover, Loan Loss Reserves (LLR) as a percentage of Total Loan Portfolio (TLP) have averaged 4.59% for the past thirty-five 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 4.08% for the past thirty-five years.

As of September 30, 2017, LLR/TLP stands at 1.93%, which is below the historical average of 4.59%, 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, 2017
Bank	Loan Loss Provisions	Gross NPLs	NPL Coverage Ratio
PHIL POSTAL SAVINGS BANK INC	357,874,671.93	2,508,468,000.93	14.27%
MARITIME SAVINGS BANK CORPORATION	6,948,645.24	23,382,029.78	29.72%
CITYSTATE SAVINGS BANK INC	57,985,000.97	188,959,446.02	30.69%
LUZON DEVELOPMENT BANK	168,938,771.90	545,046,546.55	31.00%
PHILIPPINE RESOURCES SAVINGS BANKING CORPORATION (PR SAVINGS BANK)	351,480,550.35	1,044,815,027.27	33.64%
LEMERY SAVINGS & LOAN BANK, INC.	4,774,277.32	13,423,090.28	35.57%
UNIVERSITY SAVINGS BANK INC	43,442,434.66	116,956,047.27	37.14%
WEALTH DEVELOPMENT BANK CORPORATION	143,660,259.48	380,390,453.79	37.77%
UCPB SAVINGS BANK	572,211,629.75	1,441,208,137.49	39.70%
MALASIQUI PROGRESSIVE SLB, INC	6,951,706.48	16,462,941.25	42.23%
LIFE SAVINGS BANK INC	4,824,695.67	11,416,781.69	42.26%
MALAYAN BANK SAVINGS AND MORT BANK INC	185,282,008.54	435,420,208.60	42.55%
ALLBANK (A THRIFT BANK) INC	23,226,813.08	53,131,404.08	43.72%
PRODUCERS SAVINGS BANK CORPORATION	186,386,253.06	422,122,515.34	44.15%
EQUICOM SAVINGS BANK INC	316,625,637.43	667,607,093.01	47.43%
1ST VALLEY BANK INC A DEVELOPMENT BANK	256,966,756.18	526,595,673.05	48.80%
RCBC SAVINGS BANK INC	2,431,453,414.48	4,880,055,779.99	49.82%
CHINA BANK SAVINGS INC	2,212,793,269.62	4,130,404,304.73	53.57%
AL-AMANAH ISLAMIC INVESTMENT BANK OF THE PHILS	2,812,854.03	5,222,336.47	53.86%
PNB SAVINGS BANK	773,674,598.91	1,435,899,069.48	53.88%
WORLD PARTNERS BANK (A THRIFT BANK)	74,823,694.59	133,433,965.51	56.08%
CENTURY SAVINGS BANK CORPORATION	19,702,529.95	35,040,627.61	56.23%
ENTERPRISE BANK INC (A THRIFT BANK)	121,353,813.66	215,713,578.66	56.26%
SUN SAVINGS BANK INC	18,318,429.65	31,865,252.35	57.49%
CITY SAVINGS BANK INC	1,254,175,930.66	2,171,636,478.59	57.75%
PAMPANGA DEVELOPMENT BANK	31,606,995.59	51,971,314.94	60.82%
DUMAGUETE CITY DEV BANK INC	19,299,237.59	29,599,686.48	65.20%
STANDARD CHARTERED BANK	1,712,514,476.20	2,625,905,469.28	65.22%
PENBANK INC (A PDB) (FORMERLY: PENINSULA RB INC)	123,223,858.03	188,311,423.89	65.44%
STERLING BANK OF ASIA INC (A SAVINGS BANK)	664,337,067.00	999,798,578.55	66.45%
ANZ BANKING GROUP LTD	269,626,393.67	404,087,064.26	66.72%
PHIL STAR DEVELOPMENT BANK INC	9,276,107.75	13,618,385.28	68.11%
EAST WEST BANKING CORP	6,007,211,039.23	8,571,691,526.36	70.08%
NORTHPOINT DEV'T BANK INC	119,391,217.75	167,453,354.61	71.30%
UNITED COCONUT PLANTERS BANK	2,879,657,626.33	4,006,807,441.49	71.87%
BATAAN SAVINGS AND LOAN BANK	1,595,044.62	2,089,556.31	76.33%
PHILIPPINE VETERANS BANK	1,545,833,818.57	1,883,037,451.22	82.09%
LEGAZPI SAVINGS BANK INC	266,204,467.71	320,173,069.38	83.14%
HIYAS BANKING CORPORATION	28,859,545.81	34,353,876.46	84.01%
ASIA UNITED BANK CORPORATION	2,398,708,327.73	2,729,346,887.64	87.89%
CORDILLERA SAVINGS BANK INC	14,015,675.60	15,910,979.40	88.09%
BANK ONE SAVINGS AND TRUST CORP.	44,384,460.48	49,944,276.09	88.87%
PHILIPPINE BUSINESS BANK INC A SAVINGS BANK	1,377,129,761.34	1,527,303,682.15	90.17%
PACIFIC ACE SAVINGS BANK INC	3,128,611.95	3,359,285.69	93.13%
PHIL SAVINGS BANK	4,437,039,977.44	4,610,213,814.22	96.24%
MAYBANK PHILIPPINES INCORPORATED	1,488,402,247.81	1,538,320,568.40	96.76%
PHIL BANK OF COMMUNICATIONS	2,160,147,833.79	2,216,599,337.40	97.45%
QUEEN CITY DEVELOPMENT BANK INC OR QUEENBANK A THRIFT BANK	24,402,817.45	24,547,464.17	99.41%
BANK OF MAKATI (A SAVINGS BANK) INC	2,313,298,934.55	2,326,624,061.12	99.43%
BPI FAMILY SAVINGS BANK INC	7,566,095,774.51	7,581,005,954.14	99.80%
YUANTA SAVINGS BANK PHILIPPINES INC	113,008,096.86	112,954,004.98	100.05%
BATAAN DEVELOPMENT BANK	23,381,061.33	23,282,834.47	100.42%
ROBINSONS BANK CORPORATION	804,961,431.05	771,694,104.69	104.31%
VILLAGE BANK INC (A THRIFT BANK)	30,987,101.94	29,349,566.91	105.58%
BPI DIRECT BANKO INC A SAVINGS BANK	431,833,619.78	402,048,116.22	107.41%
BANK OF COMMERCE	2,104,388,186.18	1,933,309,750.94	108.85%
FARMERS SAVINGS & LOAN BANK INC	26,449,814.62	23,926,681.31	110.55%
UNION BANK OF THE PHILS	9,045,851,109.76	8,069,495,405.68	112.10%
DEVELOPMENT BANK OF THE PHIL	6,829,373,585.30	5,788,443,476.53	117.98%
LAND BANK OF THE PHILIPPINES	11,704,299,689.59	9,545,698,986.46	122.61%
INTER-ASIA DEVELOPMENT BANK	7,953,225.52	6,364,956.89	124.95%
THE PALAWAN BANK (PALAWAN DB) INC	22,860,428.44	18,005,142.63	126.97%
HONGKONG & SHANGHAI BANKING CORP	971,318,939.15	745,759,554.02	130.25%
RIZAL COMM'L BANKING CORP	3,729,435,227.92	2,738,199,180.71	136.20%
PHIL NATIONAL BANK	12,022,124,234.33	8,771,640,884.50	137.06%
MERCHANTS SAVINGS & LOAN ASSN INC	30,510,360.82	21,944,310.69	139.04%
CHINA BANKING CORP	5,827,772,846.39	4,034,201,792.60	144.46%
BDO UNIBANK INC	27,110,966,691.04	18,340,530,156.37	147.82%
FIRST CONSOLIDATED BANK INC (A PDB)	643,528,677.51	407,424,268.73	157.95%
BANGKO KABAYAN INC (A PRIVATE DEVELOPMENT BANK)	30,841,940.08	19,285,872.47	159.92%
CARD SME BANK INC A THRIFT BANK	115,324,117.25	69,511,576.66	165.91%
CTBC BANK (PHILIPPINES) CORP	727,902,882.54	427,998,126.17	170.07%
BUSINESS AND CONSUMERS BANK (A DB)	10,387,109.24	6,090,313.34	170.55%
BANK OF THE PHIL ISLANDS	16,628,800,617.12	9,657,461,045.03	172.19%
BANK OF CHINA LIMITED-MANILA BRANCH	342,070,922.20	188,969,213.72	181.02%
HSBC SAVINGS BANK(PHILS) INC	97,284,599.77	51,109,354.88	190.35%
METRO CEBU PUBLIC SAVINGS BANK	18,559,329.09	8,869,721.90	209.24%
METROPOLITAN BANK & TCO	13,544,464,439.10	6,115,557,253.03	221.48%
PHIL TRUST COMPANY	2,598,668,029.34	1,121,366,905.75	231.74%
SECURITY BANK CORP	5,322,581,576.81	2,178,978,925.78	244.27%
KEB HANA BANK - MANILA BRANCH	70,156,824.72	28,131,704.26	249.39%
QUEZON COCONUT BANK INC (A THRIFT BANK)	1,532,986.81	519,588.36	295.04%
CITIBANK, N.A.	3,669,000,356.27	886,570,461.17	413.84%
BANGKOK BANK PUBLIC CO LTD	407,389,687.50	35,377,890.77	1151.54%
ING BANK N.V.	88,430,916.29	103.63	85333316.89%
BANK OF AMERICA N.A.	27,699,996.00	0.00	NA
BDO PRIVATE BANK, INC.	70,426,644.78	0.00	NA
CATHAY UNITED BANK CO LTD - MANILA BRANCH	11,387,003.41	0.00	NA
DEUTSCHE BANK AG	145,910,504.41	0.00	NA
FIRST COMMERCIAL BANK LTD MANILA BRANCH	2,310,000.00	0.00	NA
HUA NAN COMMERCIAL BANK LTD MANILA BRANCH	0.00	0.00	NA
INDUSTRIAL BANK OF KOREA MANILA BRANCH	15,532,197.22	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	145,409,223.49	0.00	NA
MIZUHO BANK LTD - MANILA BRANCH	477,998,367.14	0.00	NA
SHINHAN BANK - MANILA BRANCH	11,742,855.50	0.00	NA
SUMITOMO MITSUI BANKING CORPORATION-MANILA BRANCH	140,809,335.50	0.00	NA
THE BNK OF TOKYO-MITSUBISHI UFJ LTD	388,210,030.46	0.00	NA
UNITED OVERSEAS BANK LIMITED MANILA BRANCH	13,991,322.20	0.00	NA
Grand Total	171,731,463,802.97	145,936,822,530.97	117.68%

Source: www.bsp.gov.ph