On the face of it, no.
At 1.82% as of year-end 2014, NPLs as a percentage of Total Loan Portfolios are at or near historic lows.
While the NPL coverage ratio is at historic highs at 142.43% as of year-end 2014, indicating that most banks are adequately provisioned.
But NPLs can go much higher than current levels. Over the past thirty years, NPLs as a percentage of Total Loan Portfolios averaged 8.78% for Philippine Universal and Commercial Banks. Moreover, Loan Loss Reserves (LLR) as a percentage of Total Loan Portfolio (TLP) have averaged 4.83% for the past thirty 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 4.27% for the past thirty years.
As of December 2014, LLR/TLP stands at 2.59%, which is below the historical average of 4.27%, 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 | |||||
| December 31, 2014 | |||||
| Bank | Loan Loss Provisions | Gross NPLs | NPL Coverage Ratio | ||
| BATAAN DEVELOPMENT BANK | 15,341,810.78 | 75,627,159.93 | 20.29% | ||
| PROGRESS SAVINGS AND LOAN BANK INC | 267,119.31 | 1,266,509.04 | 21.09% | ||
| PRODUCERS SAVINGS BANK CORPORATION | 61,918,197.44 | 269,904,315.20 | 22.94% | ||
| EQUICOM SAVINGS BANK INC | 91,629,348.71 | 388,602,197.37 | 23.58% | ||
| 1ST VALLEY BANK INC A DEVELOPMENT BANK | 127,680,374.65 | 515,249,846.22 | 24.78% | ||
| WEALTH DEVELOPMENT BANK CORPORATION | 54,898,634.82 | 183,529,436.71 | 29.91% | ||
| LUZON DEVELOPMENT BANK | 90,361,833.71 | 297,480,192.36 | 30.38% | ||
| LIFE SAVINGS BANK INC | 2,869,806.08 | 9,393,674.72 | 30.55% | ||
| MARITIME SAVINGS BANK CORPORATION | 6,948,645.24 | 22,442,294.91 | 30.96% | ||
| COMSAVINGS BANK | 60,017,583.39 | 191,248,204.56 | 31.38% | ||
| NORTHPOINT DEV'T BANK INC | 37,350,208.75 | 114,135,388.27 | 32.72% | ||
| CENTURY SAVINGS BANK CORPORATION | 12,091,841.55 | 35,860,740.62 | 33.72% | ||
| OPPORTUNITY KAUSWAGAN BANK INC (A MICROFINANCE THRIFT BANK) | 39,715,300.34 | 108,578,097.44 | 36.58% | ||
| METRO CEBU PUBLIC SAVINGS BANK | 4,255,178.53 | 11,494,835.36 | 37.02% | ||
| QUEEN CITY DEVELOPMENT BANK INC OR QUEENBANK A THRIFT BANK | 15,538,217.16 | 41,828,094.46 | 37.15% | ||
| PAMPANGA DEVELOPMENT BANK | 19,907,091.55 | 53,348,257.64 | 37.32% | ||
| LEMERY SAVINGS & LOAN BANK, INC. | 2,348,978.31 | 6,183,105.10 | 37.99% | ||
| DUMAGUETE CITY DEV BANK INC | 16,533,857.12 | 41,174,656.59 | 40.16% | ||
| PHILIPPINE RESOURCES SAVINGS BANKING CORPORATION (PR SAVINGS | 203,056,794.60 | 500,503,576.05 | 40.57% | ||
| PLANTERS DEVELOPMENT BANK | 1,212,405,667.46 | 2,986,078,255.90 | 40.60% | ||
| ALLIED SAVINGS BANK | 168,975,864.98 | 402,721,413.68 | 41.96% | ||
| WORLD PARTNERS BANK (A THRIFT BANK) | 53,242,755.38 | 125,221,140.33 | 42.52% | ||
| DUNGGANON BANK (A MICROFINANCE THRIFT BANK) INC | 11,972,121.22 | 26,681,234.39 | 44.87% | ||
| MALAYAN BANK SAVINGS AND MORT BANK INC | 286,463,527.92 | 637,584,938.74 | 44.93% | ||
| QUEZON COCONUT BANK INC (A THRIFT BANK) | 1,032,340.52 | 2,228,732.89 | 46.32% | ||
| BUSINESS AND CONSUMERS BANK (A DB) | 6,859,774.42 | 13,926,629.29 | 49.26% | ||
| HIYAS BANKING CORPORATION | 6,830,066.93 | 13,458,793.88 | 50.75% | ||
| LEGAZPI SAVINGS BANK INC | 206,619,678.02 | 396,005,098.56 | 52.18% | ||
| EAST WEST BANKING CORP | 2,944,689,553.25 | 5,576,281,317.76 | 52.81% | ||
| CHINA BANK SAVINGS INC | 362,248,562.05 | 662,261,289.23 | 54.70% | ||
| FARMERS SAVINGS & LOAN BANK INC | 32,919,575.93 | 59,842,676.39 | 55.01% | ||
| ENTERPRISE BANK INC (A THRIFT BANK) | 55,072,039.56 | 96,877,675.31 | 56.85% | ||
| TOWER DEVELOPMENT BANK | 7,312,637.60 | 12,823,403.45 | 57.03% | ||
| RCBC SAVINGS BANK INC | 1,376,509,048.17 | 2,347,905,349.52 | 58.63% | ||
| STANDARD CHARTERED BANK | 1,534,066,308.19 | 2,547,665,279.70 | 60.21% | ||
| PENBANK INC (A PDB) (FORMERLY: PENINSULA RB INC) | 69,165,386.71 | 114,286,992.86 | 60.52% | ||
| VILLAGE BANK INC (A THRIFT BANK) | 17,342,200.42 | 28,089,103.74 | 61.74% | ||
| BANK ONE SAVINGS AND TRUST CORP. | 9,533,602.53 | 15,304,127.53 | 62.29% | ||
| STERLING BANK OF ASIA INC (A SAVINGS BANK) | 596,310,036.74 | 929,883,309.51 | 64.13% | ||
| MAYBANK PHILIPPINES INC | 1,001,628,354.26 | 1,482,039,353.94 | 67.58% | ||
| MALASIQUI PROGRESSIVE SLB, INC | 7,184,596.38 | 10,389,393.25 | 69.15% | ||
| PHILIPPINE VETERANS BANK | 1,200,012,082.32 | 1,643,267,349.87 | 73.03% | ||
| PHIL STAR DEVELOPMENT BANK INC | 6,090,315.48 | 8,288,381.02 | 73.48% | ||
| CORDILLERA SAVINGS BANK INC | 13,015,675.60 | 17,383,076.12 | 74.88% | ||
| TONGYANG SAVINGS BANK INC | 90,466,304.19 | 119,770,252.32 | 75.53% | ||
| PHIL POSTAL SAVINGS BANK INC | 409,586,108.76 | 527,067,640.97 | 77.71% | ||
| UNITED COCONUT PLANTERS BANK | 4,290,002,781.31 | 5,416,218,477.28 | 79.21% | ||
| SAMPAGUITA SAVINGS BANK INC | 20,096,752.57 | 24,560,366.62 | 81.83% | ||
| HONGKONG & SHANGHAI BANKING CORP | 1,178,493,572.50 | 1,326,767,656.33 | 88.82% | ||
| ROBINSONS BANK CORPORATION | 488,320,882.83 | 544,355,086.03 | 89.71% | ||
| THE PALAWAN BANK (PALAWAN DB) INC | 13,206,174.07 | 14,496,773.68 | 91.10% | ||
| BATAAN SAVINGS AND LOAN BANK | 2,137,583.98 | 2,344,022.09 | 91.19% | ||
| SECURITY BANK SAVINGS CORPORATION | 612,197,462.49 | 650,408,422.57 | 94.13% | ||
| PHIL BANK OF COMMUNICATIONS | 1,504,491,639.83 | 1,586,752,249.52 | 94.82% | ||
| INTER-ASIA DEVELOPMENT BANK | 8,216,032.93 | 8,624,018.49 | 95.27% | ||
| BPI FAMILY SAVINGS BANK INC | 4,783,096,518.39 | 4,890,790,457.85 | 97.80% | ||
| SUN SAVINGS BANK INC | 9,109,187.13 | 9,255,437.42 | 98.42% | ||
| PHIL NATIONAL BANK | 9,839,909,922.65 | 9,920,812,722.51 | 99.18% | ||
| UNITED OVERSEAS BANK PHILIPPINES | 671,692,961.21 | 665,442,006.65 | 100.94% | ||
| BANK OF COMMERCE | 2,622,302,225.67 | 2,574,468,973.68 | 101.86% | ||
| DEVELOPMENT BANK OF THE PHIL | 5,672,745,470.58 | 5,514,108,975.79 | 102.88% | ||
| FIRST CONSOLIDATED BANK INC (A PDB) | 481,754,837.43 | 464,360,958.42 | 103.75% | ||
| UNION BANK OF THE PHILS | 10,412,149,703.77 | 9,906,489,975.31 | 105.10% | ||
| PHIL SAVINGS BANK | 4,276,148,801.03 | 3,865,493,882.61 | 110.62% | ||
| CTBC BANK (PHILIPPINES) CORP | 499,863,665.09 | 446,996,685.64 | 111.83% | ||
| UCPB SAVINGS BANK | 543,688,861.58 | 472,269,678.32 | 115.12% | ||
| CITY SAVINGS BANK INC | 616,551,304.08 | 531,068,678.18 | 116.10% | ||
| BPI DIRECT SAVINGS BANK INC | 194,582,755.73 | 160,442,838.35 | 121.28% | ||
| PHILIPPINE BUSINESS BANK INC A SAVINGS BANK | 796,201,501.15 | 621,409,966.16 | 128.13% | ||
| HSBC SAVINGS BANK(PHILS) INC | 100,579,268.60 | 78,330,181.73 | 128.40% | ||
| RIZAL COMM'L BANKING CORP | 3,215,344,729.82 | 2,139,606,438.85 | 150.28% | ||
| UNIVERSITY SAVINGS BANK INC | 41,976,227.15 | 26,945,351.73 | 155.78% | ||
| MERCHANTS SAVINGS & LOAN ASSN INC | 11,933,041.66 | 7,516,719.70 | 158.75% | ||
| CARD SME BANK INC A THRIFT BANK | 44,678,264.68 | 28,119,896.47 | 158.88% | ||
| BANK OF THE PHIL ISLANDS | 11,801,147,524.30 | 7,351,999,296.85 | 160.52% | ||
| CHINA BANKING CORP | 6,409,595,139.93 | 3,956,317,691.92 | 162.01% | ||
| LAND BANK OF THE PHILIPPINES | 11,203,554,486.04 | 6,821,304,507.20 | 164.24% | ||
| BDO UNIBANK INC | 28,439,800,701.92 | 15,898,690,558.16 | 178.88% | ||
| PHIL TRUST COMPANY | 2,119,910,478.40 | 1,114,639,478.98 | 190.19% | ||
| OPTIMUM DEVELOPMENT BANK INC | 44,568,839.06 | 19,293,633.32 | 231.00% | ||
| CITIBANK, N.A. | 7,302,288,121.21 | 3,126,649,482.40 | 233.55% | ||
| ASIA UNITED BANK CORPORATION | 1,138,484,886.24 | 460,714,804.30 | 247.11% | ||
| SECURITY BANK CORP | 3,054,366,578.88 | 1,180,934,434.60 | 258.64% | ||
| AL-AMANAH ISLAMIC INVESTMENT BANK OF THE PHILS | 3,027,620.26 | 1,092,048.97 | 277.24% | ||
| KOREA EXCHANGE BANK | 79,258,496.14 | 23,550,179.88 | 336.55% | ||
| METROPOLITAN BANK & TCO | 12,459,721,530.10 | 2,456,299,278.71 | 507.26% | ||
| ANZ BANKING GROUP LTD | 263,070,311.88 | 23,339,114.85 | 1127.16% | ||
| BANK OF CHINA LIMITED-MANILA BRANCH | 150,776,464.14 | 8,660,895.91 | 1740.89% | ||
| JP MORGAN CHASE BANK NATIONAL ASSN. | 20,244,171.20 | 734,885.22 | 2754.74% | ||
| BANGKOK BANK PUBLIC CO LTD | 205,284,240.00 | 4,714,155.55 | 4354.63% | ||
| INTERNATIONALE NEDERLANDEN GROEP BK | 91,996,988.69 | 91.44 | 100609130.24% | ||
| BANK OF AMERICA N.A. | 20,400,004.00 | 4.00 | 510000100.00% | ||
| BDO ELITE SAVINGS BANK INC | 0.00 | 0.00 | NA | ||
| BDO PRIVATE BANK, INC. | 90,615,538.02 | 0.00 | NA | ||
| DEUTSCHE BANK AG | 334,749,868.16 | 0.00 | NA | ||
| ISLA BANK(A THRIFT BANK) INC | 4,290,580.33 | 0.00 | NA | ||
| MEGA INT'L COMM'L BANK CO LTD | 219,759,517.92 | 0.00 | NA | ||
| MIZUHO BANK LTD - MANILA BRANCH | 361,976,397.94 | 0.00 | NA | ||
| THE BNK OF TOKYO-MITSUBISHI UFJ LTD | 367,710,030.46 | 0.00 | NA | ||
| Grand Total | 150,309,253,719.33 | 118,018,574,232.94 | 127.36% | ||
Source: www.bsp.gov.ph
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