Editor's Note: The ratio of Distressed Assets to Total Capital Cushion is a variant of the famous Texas Ratio, which was widely used by US financial regulators to predict bank failure during the US Savings and Loan Crisis in the 1980s and early 1990s. The basic premise is that a bank with Distressed Assets greater than its Capital Cushion is in danger of insolvency, because a significant drop in the value of the Distressed Assets will eat into a significant amount of the bank's capital. For a more detailed discussion of this ratio, please visit a previous blog post: The Texas Ratio of Select Philippine Banks
Based on the individual Published Statements of Condition for the Philippine Universal and Commercial Banking Industry (from www.bsp.gov.ph), Total Distressed Assets of Philippine Universal and Commercial Banks increased by Php 68.367 billion or 11.79% from December 31, 2012 to March 31, 2013. This increase was offset by a 11.59% increase in their Total Capital Cushion during the same period. As a result, the Ratio of Total Distressed Assets to Total Capital Cushion of Philippine Commercial Banks increased by a slight 0.42%, from 69.97% as of December 31, 2012 to 70.27% as of March 31, 2013. (Distressed banks are highlighted in yellow).
Those banks that posted significant improvements in this ratio include:
- Philippine Bank of Communications (91.76% decrease)
- Deutsche Bank AG (59.93% decrease)
- Rizal Commercial Banking Corporation (35.29% decrease)
- Maybank Philippines Inc. (31.31% decrease)
- Philippine Trust Company (23.61% decrease)
- United Coconut Planters Bank (23.05% decrease)
- BDO Private Bank (22.74% decrease)
- Security Bank Corporation (19.26% decrease)
The banks that exhibited significant deterioration in this ratio include:
- Chinatrust (Philippines) Commercial Banking Corporation (131.15% increase)
- The Bank of Tokyo - Mitsubishi UFJ Ltd (65.09% increase)
- Citibank N.A. (60.45% increase)
- ANZ Banking Group (55.06% increase)
- Internationale Nederlanden Groep BK (35.45% increase)
- HongKong & Shanghai Banking Corporation (34.38% increase)
Distressed Banks
Two of the banks with significant increases have been classified as distressed based on their ratio of Total Distressed Assets to Total Capital Cushion as of the 1st Qtr. of 2013. These two banks ranked as distressed showed significant deterioration in their distressed ratios as of March 31, 2013. These banks are:
- Citibank N.A. (60.45% increase)
- HongKong & Shanghai Banking Corporation (34.38% increase)
United Coconut Planters Bank now ranks as the most distressed domestic Universal and Commercial Bank in the country. Its Total Distressed Assets are more than five times its Total Capital Cushion. It must be noted that this ratio is down sharply by 158.51% from 687.55% as of December 31, 2012 to 539.04% as of March 31, 2013. The second most distressed domestic Universal and Commercial Bank in the country is Bank of Commerce. Its Total Distressed Assets are almost 1.73 times its Total Capital Cushion.
The list of Philippine banks classified as distressed as of March 31, 2013 are as follows:
- Bank of China Limited - Manila Branch (Distressed Ratio of 908.15%)
- United Coconut Planters Bank (Distressed Ratio of 529.04%)
- Citibank N.A. (Distressed Ratio of 304.47%)
- Standard Chartered Bank (Distressed Ratio of 205.32%)
- Bank of Commerce (Distressed Ratio of 173.39%)
- Philippine National Bank (Distressed Ratio of 121.65%)
- Philippine Veterans Bank (Distressed Ratio of 121.53%)
- Philippine Bank of Communications (Distressed Ratio of 105.85%)
- HongKong & Shanghai Banking Corporation (Distressed Ratio of 106.70%)
Korea Exchange Bank, which had a Total Distressed Asset Ratio of 106.70% as of December 31, 2012 dropped out of the list of distressed banks, with a Total Distressed Asset Ratio of 95.44% as of March 31, 2013.
Philippine Universal and Commercial Banking System | ||||
Total Distressed Assets/ Total Capital Cushion | ||||
December 31, 2012 to March 31, 2013 | ||||
In % | ||||
Bank | March 31, 2013 | December 31, 2012 | Variance | % Variance |
Chinatrust (Philippines) Commercial Banking Corporation | 45.34% | 19.61% | 25.72% | 131.15% |
The Bank of Tokyo - Mitsubishi UFJ Ltd | 4.16% | 2.52% | 1.64% | 65.09% |
Citibank N.A. | 304.47% | 189.76% | 114.71% | 60.45% |
ANZ Banking Group Ltd | 86.61% | 55.86% | 30.75% | 55.06% |
Internationale Nederlanden Groep BK | 33.83% | 24.97% | 8.85% | 35.45% |
HongKong & Shanghai Banking Corporation | 101.57% | 75.59% | 25.99% | 34.38% |
Mizuho Corporate Bank Ltd. - Manila Branch | 60.19% | 52.81% | 7.39% | 13.98% |
Metropolitan Bank & Trust Company | 57.86% | 51.59% | 6.27% | 12.16% |
Standard Chartered Bank | 205.32% | 186.36% | 18.95% | 10.17% |
Bank of Commerce | 173.39% | 165.01% | 8.38% | 5.08% |
Union Bank of the Philippines | 80.28% | 76.56% | 3.71% | 4.85% |
Land Bank of the Philippines | 55.46% | 53.49% | 1.97% | 3.68% |
Al-Amanah Islamic Bank of the Philippines | 17.55% | 16.95% | 0.60% | 3.52% |
Asia United Bank Corporation | 84.42% | 81.91% | 2.51% | 3.06% |
Bank of China Limited - Manila Branch | 908.15% | 891.14% | 17.01% | 1.91% |
Bank of America N.A. | 4.80% | 4.75% | 0.05% | 1.05% |
Bangkok Bank Public Co. Ltd | 2.38% | 2.38% | 0.01% | 0.35% |
Philippine Veterans Bank | 121.53% | 124.35% | -2.82% | -2.27% |
China Banking Corporation | 41.80% | 44.11% | -2.31% | -5.24% |
JP Morgan Chase National Bank Association | 6.52% | 6.89% | -0.37% | -5.42% |
Mega International Commercial Bank Company Limited | 82.87% | 88.58% | -5.71% | -6.44% |
Banco De Oro Unibank | 42.90% | 46.43% | -3.53% | -7.60% |
Bank of the Philippine Islands | 42.87% | 46.71% | -3.84% | -8.22% |
Development Bank of the Philippines | 45.76% | 50.02% | -4.26% | -8.52% |
Korea Exchange Bank | 95.44% | 106.70% | -11.26% | -10.55% |
East West Banking Corporation | 61.87% | 69.17% | -7.31% | -10.56% |
Philippine National Bank | 121.65% | 139.26% | -17.61% | -12.65% |
Robinsons Bank Corporation | 34.60% | 40.26% | -5.66% | -14.06% |
Security Bank Corporation | 21.64% | 26.80% | -5.16% | -19.26% |
BDO Private Bank, Inc. | 4.85% | 6.27% | -1.43% | -22.74% |
United Coconut Planters Bank | 529.04% | 687.55% | -158.51% | -23.05% |
Philippine Trust Company | 36.69% | 48.03% | -11.34% | -23.61% |
Maybank Philippines Inc. | 40.25% | 58.60% | -18.35% | -31.31% |
Rizal Commercial Banking Corporation | 48.05% | 74.25% | -26.20% | -35.29% |
Deutsche Bank AG | 89.67% | 223.77% | -134.10% | -59.93% |
Philippine Bank of Communications | 105.85% | 1284.28% | -1178.43% | -91.76% |
Allied Banking Corporation* | NA | 62.94% | NA | NA |
Grand Total | 70.27% | 69.97% | 0.30% | 0.42% |
Philippine Universal and Commercial Banking System | |||||||||||||||
Total Distressed Assets/ Total Capital Cushion | |||||||||||||||
December 31, 2012 to March 31, 2013 | |||||||||||||||
In Php | |||||||||||||||
March 31, 2013 | December 31, 2012 | Variance | % Variance | ||||||||||||
Bank | Total Distressed Assets (In Php) | Total Capital Cushion (In Php) | Distressed Assets/ Total Capital Cushion (In %) | Total Distressed Assets (In Php) | Total Capital Cushion (In Php) | Distressed Assets/ Total Capital Cushion (In %) | Total Distressed Assets (In Php) | Total Capital Cushion (In Php) | Distressed Assets/ Total Capital Cushion (In %) | Total Distressed Assets (In Php) | Total Capital Cushion (In Php) | Distressed Assets/ Total Capital Cushion (In %) | |||
Bank of China Limited - Manila Branch | 6,226,566,132.27 | 685,633,584.43 | 908.15% | 6,098,052,440.55 | 684,298,180.30 | 891.14% | 128,513,691.72 | 1,335,404.13 | 17.01% | 2.11% | 0.20% | 1.91% | |||
United Coconut Planters Bank | 63,212,402,369.73 | 11,948,563,753.86 | 529.04% | 63,266,790,792.27 | 9,201,765,912.89 | 687.55% | -54,388,422.54 | 2,746,797,840.97 | -158.51% | -0.09% | 29.85% | -23.05% | |||
Citibank N.A. | 38,981,191,355.76 | 12,803,154,229.50 | 304.47% | 24,587,798,465.66 | 12,957,591,045.32 | 189.76% | 14,393,392,890.10 | -154,436,815.82 | 114.71% | 58.54% | -1.19% | 60.45% | |||
Standard Chartered Bank | 5,808,076,301.57 | 2,828,803,541.61 | 205.32% | 5,281,945,731.70 | 2,834,198,027.55 | 186.36% | 526,130,569.87 | -5,394,485.94 | 18.95% | 9.96% | -0.19% | 10.17% | |||
Bank of Commerce | 33,113,884,699.17 | 19,097,682,135.51 | 173.39% | 32,487,156,994.44 | 19,687,666,611.58 | 165.01% | 626,727,704.73 | -589,984,476.07 | 8.38% | 1.93% | -3.00% | 5.08% | |||
Philippine National Bank | 101,650,751,378.64 | 83,561,759,995.75 | 121.65% | 50,766,564,105.82 | 36,454,637,515.91 | 139.26% | 50,884,187,272.82 | 47,107,122,479.84 | -17.61% | 100.23% | 129.22% | -12.65% | |||
Philippine Veterans Bank | 8,509,862,413.39 | 7,002,089,593.69 | 121.53% | 8,261,265,793.78 | 6,643,455,486.88 | 124.35% | 248,596,619.61 | 358,634,106.81 | -2.82% | 3.01% | 5.40% | -2.27% | |||
Philippine Bank of Communications | 5,127,180,667.39 | 4,843,878,337.23 | 105.85% | 5,098,149,508.75 | 396,965,737.97 | 1284.28% | 29,031,158.64 | 4,446,912,599.26 | -1178.43% | 0.57% | 1120.23% | -91.76% | |||
HongKong & Shanghai Banking Corporation | 5,236,434,312.10 | 5,155,376,110.01 | 101.57% | 4,175,703,914.79 | 5,524,361,185.42 | 75.59% | 1,060,730,397.31 | -368,985,075.41 | 25.99% | 25.40% | -6.68% | 34.38% | |||
Korea Exchange Bank | 547,963,102.12 | 574,154,130.72 | 95.44% | 622,081,667.32 | 583,041,140.10 | 106.70% | -74,118,565.20 | -8,887,009.38 | -11.26% | -11.91% | -1.52% | -10.55% | |||
Deutsche Bank AG | 1,301,322,923.52 | 1,451,250,289.02 | 89.67% | 3,279,741,854.26 | 1,465,660,409.12 | 223.77% | -1,978,418,930.74 | -14,410,120.10 | -134.10% | -60.32% | -0.98% | -59.93% | |||
ANZ Banking Group Ltd | 2,101,814,224.35 | 2,426,645,703.15 | 86.61% | 1,387,062,003.08 | 2,483,140,793.85 | 55.86% | 714,752,221.27 | -56,495,090.70 | 30.75% | 51.53% | -2.28% | 55.06% | |||
Asia United Bank Corporation | 9,574,314,652.64 | 11,341,105,388.50 | 84.42% | 9,466,569,125.56 | 11,557,038,013.51 | 81.91% | 107,745,527.08 | -215,932,625.01 | 2.51% | 1.14% | -1.87% | 3.06% | |||
Mega International Commercial Bank Company Limited | 668,192,835.94 | 806,269,723.00 | 82.87% | 716,835,863.00 | 809,226,402.15 | 88.58% | -48,643,027.06 | -2,956,679.15 | -5.71% | -6.79% | -0.37% | -6.44% | |||
Union Bank of the Philippines | 42,296,512,583.07 | 52,688,551,721.95 | 80.28% | 40,003,600,777.57 | 52,249,323,368.83 | 76.56% | 2,292,911,805.50 | 439,228,353.12 | 3.71% | 5.73% | 0.84% | 4.85% | |||
East West Banking Corporation | 12,414,495,873.39 | 20,066,410,961.86 | 61.87% | 12,241,660,915.00 | 17,697,163,565.41 | 69.17% | 172,834,958.39 | 2,369,247,396.45 | -7.31% | 1.41% | 13.39% | -10.56% | |||
Mizuho Corporate Bank Ltd. - Manila Branch | 976,812,466.95 | 1,622,761,195.48 | 60.19% | 856,008,711.75 | 1,620,945,314.41 | 52.81% | 120,803,755.20 | 1,815,881.07 | 7.39% | 14.11% | 0.11% | 13.98% | |||
Metropolitan Bank & Trust Company | 65,185,952,405.94 | 112,655,751,057.95 | 57.86% | 59,066,123,023.34 | 114,491,444,450.66 | 51.59% | 6,119,829,382.60 | -1,835,693,392.71 | 6.27% | 10.36% | -1.60% | 12.16% | |||
Land Bank of the Philippines | 30,602,262,628.92 | 55,176,261,963.48 | 55.46% | 27,526,269,033.71 | 51,456,405,333.75 | 53.49% | 3,075,993,595.21 | 3,719,856,629.73 | 1.97% | 11.17% | 7.23% | 3.68% | |||
Rizal Commercial Banking Corporation | 20,540,134,877.89 | 42,748,717,015.67 | 48.05% | 26,931,182,478.09 | 36,272,524,028.31 | 74.25% | -6,391,047,600.20 | 6,476,192,987.36 | -26.20% | -23.73% | 17.85% | -35.29% | |||
Development Bank of the Philippines | 16,953,048,173.15 | 37,050,965,390.28 | 45.76% | 17,699,492,854.59 | 35,387,649,348.25 | 50.02% | -746,444,681.44 | 1,663,316,042.03 | -4.26% | -4.22% | 4.70% | -8.52% | |||
Chinatrust (Philippines) Commercial Banking Corporation | 2,999,396,492.50 | 6,615,784,871.99 | 45.34% | 1,241,753,004.91 | 6,330,948,365.80 | 19.61% | 1,757,643,487.59 | 284,836,506.19 | 25.72% | 141.55% | 4.50% | 131.15% | |||
Banco De Oro Unibank | 76,118,647,331.28 | 177,441,845,877.26 | 42.90% | 76,233,226,086.74 | 164,200,302,494.77 | 46.43% | -114,578,755.46 | 13,241,543,382.49 | -3.53% | -0.15% | 8.06% | -7.60% | |||
Bank of the Philippine Islands | 43,644,138,071.24 | 101,796,874,232.99 | 42.87% | 46,085,756,663.14 | 98,659,354,960.12 | 46.71% | -2,441,618,591.90 | 3,137,519,272.87 | -3.84% | -5.30% | 3.18% | -8.22% | |||
China Banking Corporation | 18,589,861,029.02 | 44,477,168,533.72 | 41.80% | 19,660,385,488.71 | 44,573,150,968.01 | 44.11% | -1,070,524,459.69 | -95,982,434.29 | -2.31% | -5.45% | -0.22% | -5.24% | |||
Maybank Philippines Inc. | 3,654,345,354.05 | 9,079,475,717.27 | 40.25% | 3,418,141,480.22 | 5,833,302,969.32 | 58.60% | 236,203,873.83 | 3,246,172,747.95 | -18.35% | 6.91% | 55.65% | -31.31% | |||
Philippine Trust Company | 6,745,136,340.64 | 18,382,183,736.20 | 36.69% | 7,993,333,168.52 | 16,641,374,510.58 | 48.03% | -1,248,196,827.88 | 1,740,809,225.62 | -11.34% | -15.62% | 10.46% | -23.61% | |||
Robinsons Bank Corporation | 2,104,079,483.94 | 6,081,708,945.68 | 34.60% | 2,272,055,418.39 | 5,643,568,553.73 | 40.26% | -167,975,934.45 | 438,140,391.95 | -5.66% | -7.39% | 7.76% | -14.06% | |||
Internationale Nederlanden Groep BK | 898,242,611.48 | 2,655,531,906.93 | 33.83% | 669,970,501.45 | 2,682,900,657.30 | 24.97% | 228,272,110.03 | -27,368,750.37 | 8.85% | 34.07% | -1.02% | 35.45% | |||
Security Bank Corporation | 8,469,118,833.16 | 39,137,952,338.88 | 21.64% | 8,472,633,153.76 | 31,614,925,250.60 | 26.80% | -3,514,320.60 | 7,523,027,088.28 | -5.16% | -0.04% | 23.80% | -19.26% | |||
Al-Amanah Islamic Bank of the Philippines | 78,110,484.90 | 445,124,546.72 | 17.55% | 83,636,709.00 | 493,416,267.73 | 16.95% | -5,526,224.10 | -48,291,721.01 | 0.60% | -6.61% | -9.79% | 3.52% | |||
JP Morgan Chase National Bank Association | 91,228,292.89 | 1,399,233,600.00 | 6.52% | 96,921,240.33 | 1,405,934,000.00 | 6.89% | -5,692,947.44 | -6,700,400.00 | -0.37% | -5.87% | -0.48% | -5.42% | |||
BDO Private Bank, Inc. | 254,937,650.87 | 5,260,407,527.13 | 4.85% | 299,711,692.00 | 4,778,255,132.13 | 6.27% | -44,774,041.13 | 482,152,395.00 | -1.43% | -14.94% | 10.09% | -22.74% | |||
Bank of America N.A. | 29,150,755.92 | 606,696,709.20 | 4.80% | 28,752,426.00 | 604,696,709.20 | 4.75% | 398,329.92 | 2,000,000.00 | 0.05% | 1.39% | 0.33% | 1.05% | |||
The Bank of Tokyo - Mitsubishi UFJ Ltd | 94,861,210.34 | 2,278,627,961.84 | 4.16% | 57,456,069.37 | 2,278,505,311.02 | 2.52% | 37,405,140.97 | 122,650.82 | 1.64% | 65.10% | 0.01% | 65.09% | |||
Bangkok Bank Public Co. Ltd | 29,335,883.33 | 1,230,488,677.00 | 2.38% | 28,978,615.90 | 1,219,794,847.00 | 2.38% | 357,267.43 | 10,693,830.00 | 0.01% | 1.23% | 0.88% | 0.35% | |||
Allied Banking Corporation* | NA | NA | NA | 13,226,664,523.39 | 21,015,035,816.61 | 62.94% | NA | NA | NA | NA | NA | NA | |||
Grand Total | 634,829,766,203.46 | 903,424,891,005.46 | 70.27% | 579,689,432,296.86 | 828,433,968,686.09 | 69.97% | 68,366,998,429.99 | 96,005,958,135.98 | 0.30% | 11.79% | 11.59% | 0.42% | |||
* Merged with Philippine National Bank |
Source: www.bsp.gov.ph
Disclaimer:
This list only serves as a screening guide. It is not a definitive guide and must be taken in the context of other factors. The figures are based on the individual banks' Published Statements of Condition as of December 31, 2012 and March 31, 2013 as published in the BSP website (www.bsp.gov.ph). For this analysis, no attempt was made to go through the audited financial statements of each bank. Readers are suggested to make their own investigations and verify the figures presented. Both BSP and PDIC have their own problem bank screening systems that are much more sophisticated in scope and design, given that they have more access to information over the banks they regulate.
This list only serves as a screening guide. It is not a definitive guide and must be taken in the context of other factors. The figures are based on the individual banks' Published Statements of Condition as of December 31, 2012 and March 31, 2013 as published in the BSP website (www.bsp.gov.ph). For this analysis, no attempt was made to go through the audited financial statements of each bank. Readers are suggested to make their own investigations and verify the figures presented. Both BSP and PDIC have their own problem bank screening systems that are much more sophisticated in scope and design, given that they have more access to information over the banks they regulate.