For Philippine Banks, these NPLs currently comprise PhP 220.09 billion or 9.71% of the PhP 2,266.18 billion in Stockholders Equity (SE) as of December 31, 2019. So, writing off 50% of the Philippine Banks NPLs would reduce their aggregate stockholder's equity by a little less than 5%.
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%
As of December 31,
2019, "Classified Loans and Other Risky Assets" of the Philippine Banks
amounted to PhP 482.45 billion or more than two times the size of the
Philippine Banking System's NPLs of PhP 220.09 billion for the same
period. Consequently, any write-offs of Classified Loans will have more than twice the impact of an NPL write-off.
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 482.45 billion or 21.08% of the Php 2.29 trillion in Total Capital Cushion of Philippine Banks as of December 31, 2019.
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 20.99% 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 2.10% and a 50% write-off of classified loans will reduce the banking system's Total Capital Cushion by 10.50.
Individual Banks
A 10% write-off of Classified Loans would wipe out the Total Capital Cusion of one bank (highlighted in red) and severely impact (by 25% or more) the Total Capital Cushion of twelve banks (severely affected banks highlighted in yellow).
| Philippine Banking System | ||||
| Impact of 10% Classified Loan Loss Severities on Total Capital Cushion | ||||
| December 31, 2019 | ||||
| Classified Loans | 10% Classified Loan Loss Severity | Total Capital Cushion | Impact of 10% Loss on Total Capital Cushion | |
| Bank | (In Php) | (In Php) | (In Php) | (In %) |
| OVERSEAS FILIPINO BANK INC A SAVINGS BANK OF LANDBANK | 3,438,685,615.82 | 343,868,561.58 | 343,423,948.21 | 100.13% |
| INTER-ASIA DEVELOPMENT BANK | 575,753,076.54 | 57,575,307.65 | 93,100,536.21 | 61.84% |
| SAVIOUR RURAL BANK INC | 521,159,492.86 | 52,115,949.29 | 105,124,911.77 | 49.58% |
| RB OF JAEN INC | 280,791,861.01 | 28,079,186.10 | 70,952,262.57 | 39.57% |
| RB OF CENTRAL PANGASINAN (BAYAMBANG) INC | 833,591,459.14 | 83,359,145.91 | 211,380,771.73 | 39.44% |
| COOP BANK OF CAGAYAN | 398,272,976.87 | 39,827,297.69 | 106,341,584.91 | 37.45% |
| RB OF BROOKE'S POINT (PALAWAN) INC | 353,034,512.72 | 35,303,451.27 | 108,189,285.57 | 32.63% |
| COMMTY RB OF DAPITAN CITY INC | 463,770,620.43 | 46,377,062.04 | 155,710,142.84 | 29.78% |
| BENGUET CENTER BANK INC A RB | 221,861,525.89 | 22,186,152.59 | 75,941,779.86 | 29.21% |
| MAKILING DEVELOPMENT BANK CORPORATION | 1,011,153,357.80 | 101,115,335.78 | 347,869,022.01 | 29.07% |
| RB OF DULAG (LEYTE) INC | 322,912,365.69 | 32,291,236.57 | 119,405,668.67 | 27.04% |
| RB OF PILAR (BATAAN) INC | 252,411,276.74 | 25,241,127.67 | 99,122,048.81 | 25.46% |
| VILLAGE BANK INC (A RURAL BANK) | 268,499,131.80 | 26,849,913.18 | 107,323,745.81 | 25.02% |
A 20% write-off of Classified Loans will wipe out the Total Capital Cushion of two banks (highlighted in red) and severely impact the Total Capital Cushion of twenty-four banks (highlighted in yellow):
| Philippine Banking System | ||||
| Impact of 20% Classified Loan Loss Severities on Total Capital Cushion | ||||
| December 31, 2019 | ||||
| Classified Loans | 20% Classified Loan Loss Severity | Total Capital Cushion | Impact of 20% Loss on Total Capital Cushion | |
| Bank | (In Php) | (In Php) | (In Php) | (In %) |
| OVERSEAS FILIPINO BANK INC A SAVINGS BANK OF LANDBANK | 3,438,685,615.82 | 687,737,123.16 | 343,423,948.21 | 200.26% |
| INTER-ASIA DEVELOPMENT BANK | 575,753,076.54 | 115,150,615.31 | 93,100,536.21 | 123.68% |
| SAVIOUR RURAL BANK INC | 521,159,492.86 | 104,231,898.57 | 105,124,911.77 | 99.15% |
| RB OF JAEN INC | 280,791,861.01 | 56,158,372.20 | 70,952,262.57 | 79.15% |
| RB OF CENTRAL PANGASINAN (BAYAMBANG) INC | 833,591,459.14 | 166,718,291.83 | 211,380,771.73 | 78.87% |
| COOP BANK OF CAGAYAN | 398,272,976.87 | 79,654,595.37 | 106,341,584.91 | 74.90% |
| RB OF BROOKE'S POINT (PALAWAN) INC | 353,034,512.72 | 70,606,902.54 | 108,189,285.57 | 65.26% |
| COMMTY RB OF DAPITAN CITY INC | 463,770,620.43 | 92,754,124.09 | 155,710,142.84 | 59.57% |
| BENGUET CENTER BANK INC A RB | 221,861,525.89 | 44,372,305.18 | 75,941,779.86 | 58.43% |
| MAKILING DEVELOPMENT BANK CORPORATION | 1,011,153,357.80 | 202,230,671.56 | 347,869,022.01 | 58.13% |
| RB OF DULAG (LEYTE) INC | 322,912,365.69 | 64,582,473.14 | 119,405,668.67 | 54.09% |
| RB OF PILAR (BATAAN) INC | 252,411,276.74 | 50,482,255.35 | 99,122,048.81 | 50.93% |
| VILLAGE BANK INC (A RURAL BANK) | 268,499,131.80 | 53,699,826.36 | 107,323,745.81 | 50.04% |
| YUANTA SAVINGS BANK PHILIPPINES INC | 2,626,570,357.71 | 525,314,071.54 | 1,102,416,875.42 | 47.65% |
| BANK OF CHINA LIMITED-MANILA BRANCH | 24,059,931,897.02 | 4,811,986,379.40 | 10,101,254,880.26 | 47.64% |
| RB OF CARDONA (RIZAL) INC | 311,622,665.79 | 62,324,533.16 | 134,970,533.17 | 46.18% |
| RB OF MIDSAYAP INC | 237,149,753.29 | 47,429,950.66 | 111,662,598.14 | 42.48% |
| MALAYAN BANK SAVINGS AND MORT BANK INC | 2,999,723,791.24 | 599,944,758.25 | 1,426,617,486.87 | 42.05% |
| UNITED COCONUT PLANTERS BANK | 11,975,791,267.53 | 2,395,158,253.51 | 6,468,475,009.42 | 37.03% |
| RANG-AY BANK INC (A RURAL BANK) | 940,815,754.06 | 188,163,150.81 | 534,762,711.74 | 35.19% |
| BANGKO CARRASCAL INC (A RB) | 174,609,778.48 | 34,921,955.70 | 103,004,762.17 | 33.90% |
| RB OF GENERAL TRIAS INC | 248,074,554.03 | 49,614,910.81 | 150,183,071.71 | 33.04% |
| RB OF SAN MATEO(ISABELA) INC | 244,724,507.79 | 48,944,901.56 | 155,374,983.45 | 31.50% |
| RB OF SAN LUIS (PAMPANGA) INC | 163,929,494.03 | 32,785,898.81 | 110,886,625.96 | 29.57% |
| PLANBANK "RB OF CANLUBANG PLANTERS INC" | 225,193,014.55 | 45,038,602.91 | 154,423,979.91 | 29.17% |
| COMMON WEALTH RURAL BANK INC | 167,815,317.79 | 33,563,063.56 | 133,729,174.88 | 25.10% |
A 30% write-off of Classified Loans will totally wipe out the Total Capital Cushion of six banks (highlighted in red) and severely affect (reduce by 25% or more) the Total Capital Cushion of thirty-two other banks(highlighted in yellow):
| Philippine Banking System | ||||
| Impact of 30% Classified Loan Loss Severities on Total Capital Cushion | ||||
| December 31, 2019 | ||||
| Classified Loans | 30% Classified Loan Loss Severity | Total Capital Cushion | Impact of 30% Loss on Total Capital Cushion | |
| Bank | (In Php) | (In Php) | (In Php) | (In %) |
| OVERSEAS FILIPINO BANK INC A SAVINGS BANK OF LANDBANK | 3,438,685,615.82 | 1,031,605,684.75 | 343,423,948.21 | 300.39% |
| INTER-ASIA DEVELOPMENT BANK | 575,753,076.54 | 172,725,922.96 | 93,100,536.21 | 185.53% |
| SAVIOUR RURAL BANK INC | 521,159,492.86 | 156,347,847.86 | 105,124,911.77 | 148.73% |
| RB OF JAEN INC | 280,791,861.01 | 84,237,558.30 | 70,952,262.57 | 118.72% |
| RB OF CENTRAL PANGASINAN (BAYAMBANG) INC | 833,591,459.14 | 250,077,437.74 | 211,380,771.73 | 118.31% |
| COOP BANK OF CAGAYAN | 398,272,976.87 | 119,481,893.06 | 106,341,584.91 | 112.36% |
| RB OF BROOKE'S POINT (PALAWAN) INC | 353,034,512.72 | 105,910,353.82 | 108,189,285.57 | 97.89% |
| COMMTY RB OF DAPITAN CITY INC | 463,770,620.43 | 139,131,186.13 | 155,710,142.84 | 89.35% |
| BENGUET CENTER BANK INC A RB | 221,861,525.89 | 66,558,457.77 | 75,941,779.86 | 87.64% |
| MAKILING DEVELOPMENT BANK CORPORATION | 1,011,153,357.80 | 303,346,007.34 | 347,869,022.01 | 87.20% |
| RB OF DULAG (LEYTE) INC | 322,912,365.69 | 96,873,709.71 | 119,405,668.67 | 81.13% |
| RB OF PILAR (BATAAN) INC | 252,411,276.74 | 75,723,383.02 | 99,122,048.81 | 76.39% |
| VILLAGE BANK INC (A RURAL BANK) | 268,499,131.80 | 80,549,739.54 | 107,323,745.81 | 75.05% |
| YUANTA SAVINGS BANK PHILIPPINES INC | 2,626,570,357.71 | 787,971,107.31 | 1,102,416,875.42 | 71.48% |
| BANK OF CHINA LIMITED-MANILA BRANCH | 24,059,931,897.02 | 7,217,979,569.11 | 10,101,254,880.26 | 71.46% |
| RB OF CARDONA (RIZAL) INC | 311,622,665.79 | 93,486,799.74 | 134,970,533.17 | 69.26% |
| RB OF MIDSAYAP INC | 237,149,753.29 | 71,144,925.99 | 111,662,598.14 | 63.71% |
| MALAYAN BANK SAVINGS AND MORT BANK INC | 2,999,723,791.24 | 899,917,137.37 | 1,426,617,486.87 | 63.08% |
| UNITED COCONUT PLANTERS BANK | 11,975,791,267.53 | 3,592,737,380.26 | 6,468,475,009.42 | 55.54% |
| RANG-AY BANK INC (A RURAL BANK) | 940,815,754.06 | 282,244,726.22 | 534,762,711.74 | 52.78% |
| BANGKO CARRASCAL INC (A RB) | 174,609,778.48 | 52,382,933.54 | 103,004,762.17 | 50.85% |
| RB OF GENERAL TRIAS INC | 248,074,554.03 | 74,422,366.21 | 150,183,071.71 | 49.55% |
| RB OF SAN MATEO(ISABELA) INC | 244,724,507.79 | 73,417,352.34 | 155,374,983.45 | 47.25% |
| RB OF SAN LUIS (PAMPANGA) INC | 163,929,494.03 | 49,178,848.21 | 110,886,625.96 | 44.35% |
| PLANBANK "RB OF CANLUBANG PLANTERS INC" | 225,193,014.55 | 67,557,904.37 | 154,423,979.91 | 43.75% |
| COMMON WEALTH RURAL BANK INC | 167,815,317.79 | 50,344,595.34 | 133,729,174.88 | 37.65% |
| COUNTRY BUILDERS BANK INC (A RURAL BANK) | 432,076,566.98 | 129,622,970.09 | 352,714,022.86 | 36.75% |
| BOF INC (A RURAL BANK) | 755,055,576.17 | 226,516,672.85 | 644,522,302.93 | 35.14% |
| ILOCOS CONSOLIDATED COOPERATIVE BANK | 333,323,174.82 | 99,996,952.45 | 308,472,576.39 | 32.42% |
| GATEWAY RURAL BANK INC | 130,843,866.90 | 39,253,160.07 | 122,636,297.59 | 32.01% |
| RB OF BAYOMBONG INC | 183,343,945.09 | 55,003,183.53 | 179,916,625.79 | 30.57% |
| RB OF BAMBANG (NUEVA VIZCAYA) INC | 140,404,340.60 | 42,121,302.18 | 138,079,267.69 | 30.51% |
| RB OF MARIA AURORA (AURORA) INC | 255,610,154.31 | 76,683,046.29 | 259,222,396.22 | 29.58% |
| CORDILLERA SAVINGS BANK INC | 141,244,504.41 | 42,373,351.32 | 152,504,576.55 | 27.78% |
| EQUICOM SAVINGS BANK INC | 1,041,050,249.27 | 312,315,074.78 | 1,140,430,762.66 | 27.39% |
| RB OF SAN NARCISO INC | 49,058,726.56 | 14,717,617.97 | 54,200,364.80 | 27.15% |
| GM BANK OF LUZON INC (A RURAL BANK) | 419,448,207.87 | 125,834,462.36 | 479,747,833.76 | 26.23% |
| BATAAN DEVELOPMENT BANK | 102,400,000.00 | 30,720,000.00 | 120,236,886.92 | 25.55% |
A 40% write-off of Classified Loans will totally wipe out the Total Capital Cushion of thirteen banks (highlighted in red) and severely affect (reduce by 25% or more) the Total Capital Cushion of thirty-nine more banks (highlighted in yellow):
| Philippine Banking System | ||||
| Impact of 40% Classified Loan Loss Severities on Total Capital Cushion | ||||
| December 31, 2019 | ||||
| Classified Loans | 40% Classified Loan Loss Severity | Total Capital Cushion | Impact of 40% Loss on Total Capital Cushion | |
| Bank | (In Php) | (In Php) | (In Php) | (In %) |
| OVERSEAS FILIPINO BANK INC A SAVINGS BANK OF LANDBANK | 3,438,685,615.82 | 1,375,474,246.33 | 343,423,948.21 | 400.52% |
| INTER-ASIA DEVELOPMENT BANK | 575,753,076.54 | 230,301,230.62 | 93,100,536.21 | 247.37% |
| SAVIOUR RURAL BANK INC | 521,159,492.86 | 208,463,797.14 | 105,124,911.77 | 198.30% |
| RB OF JAEN INC | 280,791,861.01 | 112,316,744.40 | 70,952,262.57 | 158.30% |
| RB OF CENTRAL PANGASINAN (BAYAMBANG) INC | 833,591,459.14 | 333,436,583.66 | 211,380,771.73 | 157.74% |
| COOP BANK OF CAGAYAN | 398,272,976.87 | 159,309,190.75 | 106,341,584.91 | 149.81% |
| RB OF BROOKE'S POINT (PALAWAN) INC | 353,034,512.72 | 141,213,805.09 | 108,189,285.57 | 130.52% |
| COMMTY RB OF DAPITAN CITY INC | 463,770,620.43 | 185,508,248.17 | 155,710,142.84 | 119.14% |
| BENGUET CENTER BANK INC A RB | 221,861,525.89 | 88,744,610.36 | 75,941,779.86 | 116.86% |
| MAKILING DEVELOPMENT BANK CORPORATION | 1,011,153,357.80 | 404,461,343.12 | 347,869,022.01 | 116.27% |
| RB OF DULAG (LEYTE) INC | 322,912,365.69 | 129,164,946.28 | 119,405,668.67 | 108.17% |
| RB OF PILAR (BATAAN) INC | 252,411,276.74 | 100,964,510.70 | 99,122,048.81 | 101.86% |
| VILLAGE BANK INC (A RURAL BANK) | 268,499,131.80 | 107,399,652.72 | 107,323,745.81 | 100.07% |
| YUANTA SAVINGS BANK PHILIPPINES INC | 2,626,570,357.71 | 1,050,628,143.08 | 1,102,416,875.42 | 95.30% |
| BANK OF CHINA LIMITED-MANILA BRANCH | 24,059,931,897.02 | 9,623,972,758.81 | 10,101,254,880.26 | 95.28% |
| RB OF CARDONA (RIZAL) INC | 311,622,665.79 | 124,649,066.32 | 134,970,533.17 | 92.35% |
| RB OF MIDSAYAP INC | 237,149,753.29 | 94,859,901.32 | 111,662,598.14 | 84.95% |
| MALAYAN BANK SAVINGS AND MORT BANK INC | 2,999,723,791.24 | 1,199,889,516.50 | 1,426,617,486.87 | 84.11% |
| UNITED COCONUT PLANTERS BANK | 11,975,791,267.53 | 4,790,316,507.01 | 6,468,475,009.42 | 74.06% |
| RANG-AY BANK INC (A RURAL BANK) | 940,815,754.06 | 376,326,301.62 | 534,762,711.74 | 70.37% |
| BANGKO CARRASCAL INC (A RB) | 174,609,778.48 | 69,843,911.39 | 103,004,762.17 | 67.81% |
| RB OF GENERAL TRIAS INC | 248,074,554.03 | 99,229,821.61 | 150,183,071.71 | 66.07% |
| RB OF SAN MATEO(ISABELA) INC | 244,724,507.79 | 97,889,803.12 | 155,374,983.45 | 63.00% |
| RB OF SAN LUIS (PAMPANGA) INC | 163,929,494.03 | 65,571,797.61 | 110,886,625.96 | 59.13% |
| PLANBANK "RB OF CANLUBANG PLANTERS INC" | 225,193,014.55 | 90,077,205.82 | 154,423,979.91 | 58.33% |
| COMMON WEALTH RURAL BANK INC | 167,815,317.79 | 67,126,127.12 | 133,729,174.88 | 50.20% |
| COUNTRY BUILDERS BANK INC (A RURAL BANK) | 432,076,566.98 | 172,830,626.79 | 352,714,022.86 | 49.00% |
| BOF INC (A RURAL BANK) | 755,055,576.17 | 302,022,230.47 | 644,522,302.93 | 46.86% |
| ILOCOS CONSOLIDATED COOPERATIVE BANK | 333,323,174.82 | 133,329,269.93 | 308,472,576.39 | 43.22% |
| GATEWAY RURAL BANK INC | 130,843,866.90 | 52,337,546.76 | 122,636,297.59 | 42.68% |
| RB OF BAYOMBONG INC | 183,343,945.09 | 73,337,578.04 | 179,916,625.79 | 40.76% |
| RB OF BAMBANG (NUEVA VIZCAYA) INC | 140,404,340.60 | 56,161,736.24 | 138,079,267.69 | 40.67% |
| RB OF MARIA AURORA (AURORA) INC | 255,610,154.31 | 102,244,061.72 | 259,222,396.22 | 39.44% |
| CORDILLERA SAVINGS BANK INC | 141,244,504.41 | 56,497,801.76 | 152,504,576.55 | 37.05% |
| EQUICOM SAVINGS BANK INC | 1,041,050,249.27 | 416,420,099.71 | 1,140,430,762.66 | 36.51% |
| RB OF SAN NARCISO INC | 49,058,726.56 | 19,623,490.62 | 54,200,364.80 | 36.21% |
| GM BANK OF LUZON INC (A RURAL BANK) | 419,448,207.87 | 167,779,283.15 | 479,747,833.76 | 34.97% |
| BATAAN DEVELOPMENT BANK | 102,400,000.00 | 40,960,000.00 | 120,236,886.92 | 34.07% |
| UCPB SAVINGS BANK | 2,911,217,229.07 | 1,164,486,891.63 | 3,726,979,885.87 | 31.24% |
| COOPERATIVE BANK OF BOHOL | 90,245,175.44 | 36,098,070.18 | 116,126,780.82 | 31.09% |
| LIBERTY BANK (A RURAL BANK) INC | 59,053,954.53 | 23,621,581.81 | 77,622,431.56 | 30.43% |
| RB OF MIAGAO (ILOILO) INC | 84,373,229.41 | 33,749,291.76 | 114,956,822.62 | 29.36% |
| PEOPLES BANK OF CARAGA INC (A RURAL BANK) | 301,508,168.76 | 120,603,267.50 | 415,729,594.05 | 29.01% |
| BANGKO MABUHAY (A RURAL BANK) INC | 245,951,177.05 | 98,380,470.82 | 344,521,242.64 | 28.56% |
| FIRST IMPERIAL BUSINESS BANK INC (A RURAL BANK) | 199,668,779.10 | 79,867,511.64 | 283,567,558.24 | 28.17% |
| CHINA BANK SAVINGS INC | 8,228,531,676.34 | 3,291,412,670.54 | 11,764,325,022.53 | 27.98% |
| NORTH PACIFIC BANKING CORPORATION (A RB OF STA MARIA ISABELA | 51,570,810.61 | 20,628,324.24 | 76,020,461.08 | 27.14% |
| RB OF MAGDALENA (LAGUNA) INC | 86,483,323.53 | 34,593,329.41 | 128,197,012.39 | 26.98% |
| LEGAZPI SAVINGS BANK INC | 543,831,000.00 | 217,532,400.00 | 816,569,507.79 | 26.64% |
| PBCOM RURAL BANK INC | 603,500,726.06 | 241,400,290.42 | 919,567,587.85 | 26.25% |
| LIPA BANK INC (A RB) | 57,934,704.58 | 23,173,881.83 | 88,701,384.66 | 26.13% |
| HIGHLAND RURAL BANK INC | 121,022,802.05 | 48,409,120.82 | 186,038,608.77 | 26.02% |
A 50% write-off of Classified Loans will totally wipe out the Total Capital Cushion of eighteen banks (highlighted in red) and severely affect (reduce by 25% or more) the Total Capital Cushion of fourty-four more banks (highlighted in yellow):
| Philippine Banking System | ||||
| Impact of 50% Classified Loan Loss Severities on Total Capital Cushion | ||||
| December 31, 2019 | ||||
| Classified Loans | 50% Classified Loan Loss Severity | Total Capital Cushion | Impact of 50% Loss on Total Capital Cushion | |
| Bank | (In Php) | (In Php) | (In Php) | (In %) |
| OVERSEAS FILIPINO BANK INC A SAVINGS BANK OF LANDBANK | 3,438,685,615.82 | 1,719,342,807.91 | 343,423,948.21 | 500.65% |
| INTER-ASIA DEVELOPMENT BANK | 575,753,076.54 | 287,876,538.27 | 93,100,536.21 | 309.21% |
| SAVIOUR RURAL BANK INC | 521,159,492.86 | 260,579,746.43 | 105,124,911.77 | 247.88% |
| RB OF JAEN INC | 280,791,861.01 | 140,395,930.51 | 70,952,262.57 | 197.87% |
| RB OF CENTRAL PANGASINAN (BAYAMBANG) INC | 833,591,459.14 | 416,795,729.57 | 211,380,771.73 | 197.18% |
| COOP BANK OF CAGAYAN | 398,272,976.87 | 199,136,488.44 | 106,341,584.91 | 187.26% |
| RB OF BROOKE'S POINT (PALAWAN) INC | 353,034,512.72 | 176,517,256.36 | 108,189,285.57 | 163.16% |
| COMMTY RB OF DAPITAN CITY INC | 463,770,620.43 | 231,885,310.22 | 155,710,142.84 | 148.92% |
| BENGUET CENTER BANK INC A RB | 221,861,525.89 | 110,930,762.95 | 75,941,779.86 | 146.07% |
| MAKILING DEVELOPMENT BANK CORPORATION | 1,011,153,357.80 | 505,576,678.90 | 347,869,022.01 | 145.34% |
| RB OF DULAG (LEYTE) INC | 322,912,365.69 | 161,456,182.85 | 119,405,668.67 | 135.22% |
| RB OF PILAR (BATAAN) INC | 252,411,276.74 | 126,205,638.37 | 99,122,048.81 | 127.32% |
| VILLAGE BANK INC (A RURAL BANK) | 268,499,131.80 | 134,249,565.90 | 107,323,745.81 | 125.09% |
| YUANTA SAVINGS BANK PHILIPPINES INC | 2,626,570,357.71 | 1,313,285,178.86 | 1,102,416,875.42 | 119.13% |
| BANK OF CHINA LIMITED-MANILA BRANCH | 24,059,931,897.02 | 12,029,965,948.51 | 10,101,254,880.26 | 119.09% |
| RB OF CARDONA (RIZAL) INC | 311,622,665.79 | 155,811,332.90 | 134,970,533.17 | 115.44% |
| RB OF MIDSAYAP INC | 237,149,753.29 | 118,574,876.65 | 111,662,598.14 | 106.19% |
| MALAYAN BANK SAVINGS AND MORT BANK INC | 2,999,723,791.24 | 1,499,861,895.62 | 1,426,617,486.87 | 105.13% |
| UNITED COCONUT PLANTERS BANK | 11,975,791,267.53 | 5,987,895,633.77 | 6,468,475,009.42 | 92.57% |
| RANG-AY BANK INC (A RURAL BANK) | 940,815,754.06 | 470,407,877.03 | 534,762,711.74 | 87.97% |
| BANGKO CARRASCAL INC (A RB) | 174,609,778.48 | 87,304,889.24 | 103,004,762.17 | 84.76% |
| RB OF GENERAL TRIAS INC | 248,074,554.03 | 124,037,277.02 | 150,183,071.71 | 82.59% |
| RB OF SAN MATEO(ISABELA) INC | 244,724,507.79 | 122,362,253.90 | 155,374,983.45 | 78.75% |
| RB OF SAN LUIS (PAMPANGA) INC | 163,929,494.03 | 81,964,747.02 | 110,886,625.96 | 73.92% |
| PLANBANK "RB OF CANLUBANG PLANTERS INC" | 225,193,014.55 | 112,596,507.28 | 154,423,979.91 | 72.91% |
| COMMON WEALTH RURAL BANK INC | 167,815,317.79 | 83,907,658.90 | 133,729,174.88 | 62.74% |
| COUNTRY BUILDERS BANK INC (A RURAL BANK) | 432,076,566.98 | 216,038,283.49 | 352,714,022.86 | 61.25% |
| BOF INC (A RURAL BANK) | 755,055,576.17 | 377,527,788.09 | 644,522,302.93 | 58.57% |
| ILOCOS CONSOLIDATED COOPERATIVE BANK | 333,323,174.82 | 166,661,587.41 | 308,472,576.39 | 54.03% |
| GATEWAY RURAL BANK INC | 130,843,866.90 | 65,421,933.45 | 122,636,297.59 | 53.35% |
| RB OF BAYOMBONG INC | 183,343,945.09 | 91,671,972.55 | 179,916,625.79 | 50.95% |
| RB OF BAMBANG (NUEVA VIZCAYA) INC | 140,404,340.60 | 70,202,170.30 | 138,079,267.69 | 50.84% |
| RB OF MARIA AURORA (AURORA) INC | 255,610,154.31 | 127,805,077.16 | 259,222,396.22 | 49.30% |
| CORDILLERA SAVINGS BANK INC | 141,244,504.41 | 70,622,252.21 | 152,504,576.55 | 46.31% |
| EQUICOM SAVINGS BANK INC | 1,041,050,249.27 | 520,525,124.64 | 1,140,430,762.66 | 45.64% |
| RB OF SAN NARCISO INC | 49,058,726.56 | 24,529,363.28 | 54,200,364.80 | 45.26% |
| GM BANK OF LUZON INC (A RURAL BANK) | 419,448,207.87 | 209,724,103.94 | 479,747,833.76 | 43.72% |
| BATAAN DEVELOPMENT BANK | 102,400,000.00 | 51,200,000.00 | 120,236,886.92 | 42.58% |
| UCPB SAVINGS BANK | 2,911,217,229.07 | 1,455,608,614.54 | 3,726,979,885.87 | 39.06% |
| COOPERATIVE BANK OF BOHOL | 90,245,175.44 | 45,122,587.72 | 116,126,780.82 | 38.86% |
| LIBERTY BANK (A RURAL BANK) INC | 59,053,954.53 | 29,526,977.27 | 77,622,431.56 | 38.04% |
| RB OF MIAGAO (ILOILO) INC | 84,373,229.41 | 42,186,614.71 | 114,956,822.62 | 36.70% |
| PEOPLES BANK OF CARAGA INC (A RURAL BANK) | 301,508,168.76 | 150,754,084.38 | 415,729,594.05 | 36.26% |
| BANGKO MABUHAY (A RURAL BANK) INC | 245,951,177.05 | 122,975,588.53 | 344,521,242.64 | 35.69% |
| FIRST IMPERIAL BUSINESS BANK INC (A RURAL BANK) | 199,668,779.10 | 99,834,389.55 | 283,567,558.24 | 35.21% |
| CHINA BANK SAVINGS INC | 8,228,531,676.34 | 4,114,265,838.17 | 11,764,325,022.53 | 34.97% |
| NORTH PACIFIC BANKING CORPORATION (A RB OF STA MARIA ISABELA | 51,570,810.61 | 25,785,405.31 | 76,020,461.08 | 33.92% |
| RB OF MAGDALENA (LAGUNA) INC | 86,483,323.53 | 43,241,661.77 | 128,197,012.39 | 33.73% |
| LEGAZPI SAVINGS BANK INC | 543,831,000.00 | 271,915,500.00 | 816,569,507.79 | 33.30% |
| PBCOM RURAL BANK INC | 603,500,726.06 | 301,750,363.03 | 919,567,587.85 | 32.81% |
| LIPA BANK INC (A RB) | 57,934,704.58 | 28,967,352.29 | 88,701,384.66 | 32.66% |
| HIGHLAND RURAL BANK INC | 121,022,802.05 | 60,511,401.03 | 186,038,608.77 | 32.53% |
| PHILIPPINE VETERANS BANK | 3,443,066,628.85 | 1,721,533,314.43 | 5,630,463,823.05 | 30.58% |
| SUGBUANON RB INC | 68,793,486.35 | 34,396,743.18 | 113,938,239.90 | 30.19% |
| PHIL BANK OF COMMUNICATIONS | 7,543,624,438.59 | 3,771,812,219.30 | 12,588,949,484.09 | 29.96% |
| RB OF SAN PASCUAL(OBANDO BULACAN)INC | 48,558,629.45 | 24,279,314.73 | 85,710,801.76 | 28.33% |
| NEW RB OF SAN LEONARDO (N.E.) INC | 142,891,763.16 | 71,445,881.58 | 255,664,975.85 | 27.95% |
| ASIA UNITED BANK CORPORATION | 16,554,349,605.07 | 8,277,174,802.54 | 30,243,403,814.72 | 27.37% |
| MARITIME SAVINGS BANK CORPORATION | 32,464,513.96 | 16,232,256.98 | 59,886,125.75 | 27.11% |
| BHF RURAL BANK INC | 187,401,945.91 | 93,700,972.96 | 348,405,241.98 | 26.89% |
| RB OF SAN JOSE (CAMARINES SUR) INC | 93,812,529.64 | 46,906,264.82 | 180,723,992.18 | 25.95% |
| PENBANK INC (A PDB) (FORMERLY: PENINSULA RB INC) | 316,774,524.03 | 158,387,262.02 | 612,323,323.05 | 25.87% |
Please bear in mind that a number of these banks are already very weak and are in distress. Please see a previous blog post: "The Top Distressed Philippine Banks as of December 31, 2019. Moreover, their capital can be overstated. See a previous blog post "Overstated Capital of Philippine Banks as of September 30, 2019".
As such, any reduction in their capital cushion could knock down an already weak bank.
Source: www.bsp.gov.ph
