On the face of it, no.
At 1.30% as of September 30, 2018, NPLs as a percentage of Total Loan Portfolios are at historic lows.
The NPL Coverage Ratio is near historic highs at 138.26% as of September 30, 2018.
However, NPLs can go much higher than current levels. Over the past thirty-five years, NPLs as a percentage of Total Loan Portfolios averaged 7.97% for Philippine Universal and Commercial Banks. Moreover, Loan Loss Reserves (LLR) as a percentage of Total Loan Portfolio (TLP) have averaged 4.51% 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 4.07% for the past thirty-five years.
As of September 30, 2018, LLR/TLP stands at 1.80%, which is below the historical average of 4.51%, 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, 2018 | |||||
| Bank | Loan Loss Provisions | Gross NPLs | NPL Coverage Ratio | ||
| OVERSEAS FILIPINO BANK INC A SAVINGS BANK OF LANDBANK | 429,050,672.43 | 2,200,789,892.72 | 19.50% | ||
| ALLBANK (A THRIFT BANK) INC | 33,943,161.99 | 127,269,730.63 | 26.67% | ||
| PHILIPPINE RESOURCES SAVINGS BANKING | 384,104,649.18 | 1,335,254,894.57 | 28.77% | ||
| LEMERY SAVINGS & LOAN BANK, INC. | 2,245,080.45 | 7,744,052.82 | 28.99% | ||
| UCPB SAVINGS BANK | 567,011,384.46 | 1,935,843,102.92 | 29.29% | ||
| MARITIME SAVINGS BANK CORPORATION | 6,948,645.24 | 22,871,486.95 | 30.38% | ||
| PNB SAVINGS BANK | 805,324,872.37 | 2,432,403,665.94 | 33.11% | ||
| WEALTH DEVELOPMENT BANK CORPORATION | 155,828,456.99 | 430,079,540.50 | 36.23% | ||
| PACIFIC ACE SAVINGS BANK INC | 2,123,336.17 | 5,715,436.00 | 37.15% | ||
| EQUICOM SAVINGS BANK INC | 261,892,363.03 | 680,239,107.69 | 38.50% | ||
| ENTERPRISE BANK INC (A THRIFT BANK) | 148,926,171.26 | 356,405,207.95 | 41.79% | ||
| STERLING BANK OF ASIA INC (A SAVINGS | 712,777,155.31 | 1,540,579,044.23 | 46.27% | ||
| QUEZON COCONUT BANK INC (A THRIFT BANK) | 1,303,520.97 | 2,750,058.15 | 47.40% | ||
| 1ST VALLEY BANK INC A DEVELOPMENT BANK | 322,298,761.39 | 655,178,883.27 | 49.19% | ||
| BATAAN DEVELOPMENT BANK | 21,905,463.47 | 43,838,647.03 | 49.97% | ||
| UNIVERSITY SAVINGS BANK INC | 44,855,430.47 | 88,980,921.54 | 50.41% | ||
| CITY SAVINGS BANK INC | 1,278,143,141.45 | 2,349,989,074.91 | 54.39% | ||
| RCBC SAVINGS BANK INC | 2,384,442,457.66 | 4,323,774,066.58 | 55.15% | ||
| CHINA BANK SAVINGS INC | 1,974,885,653.33 | 3,441,198,508.56 | 57.39% | ||
| BPI FAMILY SAVINGS BANK INC | 6,208,962,899.55 | 10,552,134,142.00 | 58.84% | ||
| PRODUCERS SAVINGS BANK CORPORATION | 178,366,079.27 | 301,475,746.19 | 59.16% | ||
| PAMPANGA DEVELOPMENT BANK | 35,695,784.79 | 56,591,647.47 | 63.08% | ||
| BUSINESS AND CONSUMERS BANK (A DB) | 9,807,832.52 | 15,247,805.02 | 64.32% | ||
| EAST WEST BANKING CORP | 6,664,874,408.99 | 9,928,665,998.30 | 67.13% | ||
| BANGKO KABAYAN INC (A PRIVATE DEVELOPMENT | 24,867,661.97 | 36,485,231.94 | 68.16% | ||
| FIRST CONSOLIDATED BANK INC (A PDB) | 664,965,033.94 | 972,574,900.13 | 68.37% | ||
| UNITED COCONUT PLANTERS BANK | 4,029,910,303.35 | 5,788,951,065.80 | 69.61% | ||
| BANK OF MAKATI (A SAVINGS BANK) INC | 1,598,324,910.06 | 2,236,149,315.57 | 71.48% | ||
| UNION BANK OF THE PHILS | 6,040,061,826.69 | 8,362,824,273.02 | 72.23% | ||
| PHIL SAVINGS BANK | 4,613,120,050.09 | 6,079,237,828.83 | 75.88% | ||
| HIYAS BANKING CORPORATION | 28,859,545.81 | 37,619,784.78 | 76.71% | ||
| CITYSTATE SAVINGS BANK INC | 74,322,686.83 | 95,397,795.70 | 77.91% | ||
| STANDARD CHARTERED BANK | 2,079,910,436.34 | 2,636,355,424.79 | 78.89% | ||
| BANK ONE SAVINGS CORPORATION | 44,360,200.39 | 55,495,016.00 | 79.94% | ||
| BPI DIRECT BANKO INC A SAVINGS BANK | 758,636,217.56 | 940,487,823.05 | 80.66% | ||
| LEGAZPI SAVINGS BANK INC | 269,295,308.41 | 333,789,458.23 | 80.68% | ||
| SUN SAVINGS BANK INC | 20,767,357.87 | 24,553,384.53 | 84.58% | ||
| RIZAL COMM'L BANKING CORP | 3,198,644,715.60 | 3,687,347,269.88 | 86.75% | ||
| MALAYAN BANK SAVINGS AND MORT BANK INC | 344,978,703.57 | 383,863,085.92 | 89.87% | ||
| ASIA UNITED BANK CORPORATION | 2,916,218,326.27 | 3,140,761,256.03 | 92.85% | ||
| PHIL BANK OF COMMUNICATIONS | 2,071,632,660.95 | 2,227,830,089.40 | 92.99% | ||
| YUANTA SAVINGS BANK PHILIPPINES INC | 103,943,371.91 | 107,918,892.35 | 96.32% | ||
| INTER-ASIA DEVELOPMENT BANK | 7,801,138.20 | 8,003,219.40 | 97.48% | ||
| PHILIPPINE BUSINESS BANK INC A SAVINGS | 1,659,463,062.38 | 1,670,174,788.13 | 99.36% | ||
| DUMAGUETE CITY DEV BANK INC | 19,299,237.59 | 19,352,294.27 | 99.73% | ||
| ROBINSONS BANK CORPORATION | 869,175,859.43 | 837,243,488.25 | 103.81% | ||
| PENBANK INC (A PDB) (FORMERLY: PENINSULA | 116,963,969.64 | 112,664,915.67 | 103.82% | ||
| NORTHPOINT DEV'T BANK INC | 116,559,202.49 | 107,859,057.88 | 108.07% | ||
| FARMERS SAVINGS & LOAN BANK INC | 27,476,885.73 | 25,140,440.92 | 109.29% | ||
| DEVELOPMENT BANK OF THE PHIL | 7,262,443,464.95 | 6,602,579,350.58 | 109.99% | ||
| CORDILLERA SAVINGS BANK INC | 15,165,504.60 | 13,267,153.17 | 114.31% | ||
| MERCHANTS SAVINGS & LOAN ASSN INC | 78,886,433.96 | 68,439,569.26 | 115.26% | ||
| SECURITY BANK CORP | 3,185,335,132.57 | 2,617,722,711.70 | 121.68% | ||
| BANK OF COMMERCE | 2,188,032,631.22 | 1,716,313,857.28 | 127.48% | ||
| MAYBANK PHILIPPINES INCORPORATED | 2,156,753,376.51 | 1,684,022,869.48 | 128.07% | ||
| PHIL NATIONAL BANK | 12,371,380,234.05 | 9,211,276,436.89 | 134.31% | ||
| BANK OF THE PHIL ISLANDS | 15,415,358,860.40 | 11,453,165,899.59 | 134.59% | ||
| LAND BANK OF THE PHILIPPINES | 15,396,683,001.08 | 10,303,174,785.49 | 149.44% | ||
| CTBC BANK (PHILIPPINES) CORP | 760,381,386.86 | 486,534,090.10 | 156.29% | ||
| CARD SME BANK INC A THRIFT BANK | 179,343,060.47 | 113,262,457.07 | 158.34% | ||
| CHINA BANKING CORP | 5,250,825,862.95 | 2,977,677,152.77 | 176.34% | ||
| LIFE SAVINGS BANK INC | 5,424,695.67 | 2,826,635.39 | 191.91% | ||
| BDO UNIBANK INC | 33,313,727,520.85 | 16,819,459,499.14 | 198.07% | ||
| CENTURY SAVINGS BANK CORPORATION | 19,537,665.62 | 9,576,010.25 | 204.03% | ||
| METROPOLITAN BANK & TCO | 17,528,399,632.04 | 7,311,098,641.93 | 239.75% | ||
| HSBC SAVINGS BANK(PHILS) INC | 103,572,570.73 | 39,257,127.28 | 263.83% | ||
| METRO CEBU PUBLIC SAVINGS BANK | 25,738,098.54 | 9,340,189.11 | 275.56% | ||
| CITIBANK, N.A. | 2,881,557,893.29 | 1,041,410,107.97 | 276.70% | ||
| PHIL TRUST COMPANY | 3,276,793,042.10 | 1,120,924,013.08 | 292.33% | ||
| QUEEN CITY DEVELOPMENT BANK INC OR QUEENBANK | 22,468,801.30 | 7,096,494.50 | 316.62% | ||
| HONGKONG & SHANGHAI BANKING CORP | 1,778,392,988.32 | 496,832,854.33 | 357.95% | ||
| KEB HANA BANK - MANILA BRANCH | 96,772,719.47 | 23,050,217.08 | 419.83% | ||
| AL-AMANAH ISLAMIC INVESTMENT BANK OF THE PHILS | 3,250,374.39 | 107,342.00 | 3028.05% | ||
| MEGA INT'L COMM'L BANK CO LTD | 226,379,249.43 | 5,025,000.00 | 4505.06% | ||
| ING BANK N.V. | 94,683,922.69 | 110.04 | 86045004.26% | ||
| BANK OF AMERICA N.A. | 21,994,948.48 | 0.00 | NA | ||
| BANK OF CHINA LIMITED-MANILA BRANCH | 178,392,364.78 | 0.00 | NA | ||
| BDO PRIVATE BANK, INC. | 8,960,971.92 | 0.00 | NA | ||
| CATHAY UNITED BANK CO LTD - MANILA BRANCH | 30,208,542.18 | 0.00 | NA | ||
| CHANG HWA COMMERCIAL BANK LTD - MANILA BRANCH | 0.00 | 0.00 | NA | ||
| DEUTSCHE BANK AG | 243,015,193.99 | 0.00 | NA | ||
| FIRST COMMERCIAL BANK LTD MANILA BRANCH | 6,522,440.00 | 0.00 | NA | ||
| HUA NAN COMMERCIAL BANK LTD MANILA BRANCH | 0.00 | 0.00 | NA | ||
| INDUSTRIAL BANK OF KOREA MANILA BRANCH | 28,590,213.94 | 0.00 | NA | ||
| ISLA BANK(A THRIFT BANK) INC | 4,290,580.33 | 0.00 | NA | ||
| JP MORGAN CHASE BANK NATIONAL ASSN. | 16,000,000.00 | 0.00 | NA | ||
| MIZUHO BANK LTD - MANILA BRANCH | 519,938,706.71 | 0.00 | NA | ||
| MUFG BANK, LTD. | 388,082,494.46 | 0.00 | NA | ||
| PHIL STAR DEVELOPMENT BANK INC | 413,704.66 | 0.00 | NA | ||
| SHINHAN BANK - MANILA BRANCH | 28,545,705.05 | 0.00 | NA | ||
| SUMITOMO MITSUI BANKING CORPORATION-MANILA BRANCH | 24,055,138.32 | 0.00 | NA | ||
| Grand Total | 179,471,575,184.69 | 156,896,541,337.89 | 114.39% | ||
Source: www.bsp.gov.ph
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