Overstated Capital of Philippine Banks as of March 31, 2019

Overstated Capital

On July 25, 2012, the Bangko Sentral ng Pilipinas (BSP) encouraged banks that continue to reflect unbooked losses or "deferred charges" on their balance sheets to charge those losses against retained earnings.  This implies that the BSP now considers that these banks have amassed so much in Stockholder's Equity (SE) and Retained Earnings (RE) that "they can now afford to absorb higher charges without impairing their capital and also without making their shareholders unhappy."

But can these banks do so? The answer is: yes but only for some banks.  As can be seen from the table below, five banks have Deferred Charges as of March 31, 2019 but only one bank's deferred charges will adversely impact its Stockholder's Equity (SE).

1. RB of Mabalacat (Deferred Charges of 33.15%)

Retained Earnings

Only one bank, RB of Mabalacat Inc, does not have sufficient Retained Earnings (RE) to absorb their unbooked losses as of March 31, 2019.

1. RB of Mabalacat Inc (-126.38% of RE)