Philippine Banks Improve Slightly in the 3rd Quarter of 2018

Editor's Note: This post has been updated to reflect new information on the BSP website. The number of non-reporting banks has decreased from 21 banks as of January 2, 2019 to just 9 banks as of January 16, 2019.

Editor's Note: According to the BSP website, www.bsp.gov.ph, a record 9 banks do not have Published Statements of Condition for the quarter ended on September 30, 2018. This comprises over 9% of the 100 Philippine Universal and Commercial Banks (U/KBs) and Thrift Banks tracked by this blog. A google search reveals that these non-reporting banks are still operating and there has been no adverse news about them. So why have they gone dark?


The number of non-reporting banks has gone up substantially in 2018. As of March 31, 2018, only two banks failed to have their Published Statements of Condition available at the BSP website. On June 30, 2018, that number went up to six. And now that number is now 9 as of September 30, 2018.


Have these banks opted-out from the required financial disclosures? It's not clear if they have done so. Apparently, banks can opt-out of mandatory public disclosure.

 "Banks that do not want their statement of condition published must get approval from at least five members of the seven-man Monetary Board.2 The regulators themselves may also decide to exclude certain kinds of banks from mandatory public disclosure."

Let's hope that this is a mere glitch in the BSP website. Perhaps, their financial disclosures were improperly uploaded in the BSP website. Otherwise, the depositors have no means of evaluating the health of their bank other than what is disclosed in the individual bank's website or what is available in back-dated issues of obscure newspapers.
 
Not all of these banks are small banks, some of them are UKBs that are fairly substantial in size. Here's the list:

Philippine Banking System
Banks with No Published Statement of Condition
September 30, 2018
Bank	Type of Bank	Published Statement of Condition
ANZ BANKING GROUP LTD	U/KB	NA
BANGKOK BANK PUBLIC CO LTD	U/KB	NA
BATAAN SAVINGS AND LOAN BANK	Thrift Bank	NA
LUZON DEVELOPMENT BANK	Thrift Bank	NA
MALASIQUI PROGRESSIVE SLB, INC	Thrift Bank	NA
MAXIMUM SAVINGS BANK	Thrift Bank	NA
PHILIPPINE VETERANS BANK	U/KB	NA
THE PALAWAN BANK (PALAWAN DB) INC	Thrift Bank	NA
UNITED OVERSEAS BANK LIMITED MANILA BRANCH	U/KB	NA

Editor's Note: The Philippine Deposit Insurance Corporation (PDIC) advised consumers to wisely choose the banks where they will deposit their money. The trouble is, most depositors don't and can't read financial statements before they open a bank account. The regulators, whose job is to safeguard the public's money, have not done a good job recently.  In the past ten years, two commercial banks, twenty-one thrift banks, and a staggering 187 rural banks have collapsed, often quite suddenly and without warning. Regulators do have a problem bank list that they do not divulge to the public, for fear of sparking another bank run. So who can the public turn to, to advise them where to put their money? No one, except the banks themselves who will always promote their self-interests. This analysis is an attempt to fill in that knowledge gap, by screening out the weaker banks that seem ready to implode at any given moment.

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 Banking Industry (from www.bsp.gov.ph), Total Distressed Assets of Philippine Banks decreased by Php 9.42 billion or 1.33% from June 30, 2018 to September 30, 2018.  This increase was enhanced by the increase of their Total Capital Cushion of Php 38.68 billion or 1.99% during the same period. As a result, the Ratio of Total Distressed Assets to Total Capital Cushion of Philippine Commercial Banks decreased by 1.02%, from 36.45% as of June 30, 2018 to 35.43%. On a year on year basis, the Distressed Asset Ratio has decreased 3.41 percentage points from 38.84% as of September 30, 2017 to just 35.43% as of September 30, 2018.

The list of Philippine Banks classified as distressed as of September 30, 2018 are as follows:



 

The Top Distressed Philippine Banks
Total Distressed Assets/ Total Capital Cushion
September 30, 2018
In Php
	September 30, 2018
Bank	Total Distressed Assets (In PhP)	Total Capital Cushion (In PhP)	Distressed Assets/ Total Capital Cushion (In %)
INTER-ASIA DEVELOPMENT BANK	313,835,934.30	84,618,795.20	370.88%
UNITED COCONUT PLANTERS BANK	24,914,894,323.01	7,719,497,581.62	322.75%
OVERSEAS FILIPINO BANK INC A SAVINGS BANK OF LANDBANK	4,385,019,875.96	1,501,659,354.64	292.01%
BANGKO KABAYAN INC (A PRIVATE DEVELOPMENT	1,160,451,343.08	490,008,811.74	236.82%
YUANTA SAVINGS BANK PHILIPPINES INC	1,803,341,416.96	1,039,987,637.89	173.40%
MALAYAN BANK SAVINGS AND MORT BANK INC	2,592,493,569.81	1,536,771,889.86	168.70%
ENTERPRISE BANK INC (A THRIFT BANK)	626,064,889.16	403,450,165.03	155.18%
RCBC SAVINGS BANK INC	19,739,333,362.01	14,804,232,119.71	133.34%
EQUICOM SAVINGS BANK INC	1,168,404,097.95	950,735,450.51	122.89%
BANK OF CHINA LIMITED-MANILA BRANCH	11,732,169,883.40	10,155,782,971.07	115.52%
CHINA BANK SAVINGS INC	12,522,770,673.05	11,473,666,405.29	109.14%
PHILIPPINE RESOURCES SAVINGS BANKING	3,071,713,182.72	2,971,932,224.64	103.36%
Grand Total	84,030,492,551.41	53,132,343,407.20	158.15%

 


As a group, the distressed banks showed an increase in their Total Distressed Assets/Total Capital Cushion Ratios.  This ratio now stands at  158.15% as of September 30, 2018, up from 152.12% as of June 30, 2018.

 Arrivals

1.  Overseas Filipino Bank Inc entered the Distressed Banks list with a Distressed Asset Ratio of 292.01% as of September 30, 2018. In June 30, 2018, it had no Published Statement of Condition in the www.bsp.gov.ph website.

 Departures

1.  Bataan Development Bank left the Distressed Banks list with a Distressed Asset Ratio of 99.48% as of September 30, 2018, down from 100.62% as of June 30, 2018.
2. Philippine Business Bank Inc left the Distressed Banks list with a Distressed Asset Ratio of 37.26% as of September 30, 2018, down from 128.52% as of June 30, 2018.

 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' statement of condition as of June 30, 2018 and September 30, 2018 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.