For Philippine Banks, these NPLs currently comprise PhP 197.13` billion or 9.48% of the PhP 2,078.44 billion in Stockholders Equity (SE) as of March 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%
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 429.22 billion or 19.46% of the Php 2.20 trillion in Total
Capital Cushion of Philippine Banks as of March 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 19.46% 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 1.95% and a 50% write-off of classified loans will reduce the banking system's Total Capital Cushion by 9.73%.
Individual Banks
A 10% write-off of Classified Loans would severely impact (by 25% or more) the Total Capital Cushion of eleven banks (severely affected banks highlighted in yellow).
| Philippine Banking System | ||||
| Impact of 10% Classified Loan Loss Severities on Total Capital Cushion | ||||
| March 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 %) |
| SAVIOUR RURAL BANK INC | 508,362,134.12 | 50,836,213.41 | 101,990,261.31 | 49.84% |
| RB OF CENTRAL PANGASINAN (BAYAMBANG) INC | 836,410,095.47 | 83,641,009.55 | 188,221,991.32 | 44.44% |
| RB OF JAEN INC | 245,748,458.38 | 24,574,845.84 | 59,232,407.94 | 41.49% |
| MOUNT MAKILING RURAL BANK INC | 950,903,559.85 | 95,090,355.99 | 278,855,031.66 | 34.10% |
| INTER-ASIA DEVELOPMENT BANK | 310,975,394.74 | 31,097,539.47 | 91,796,389.86 | 33.88% |
| COOP BANK OF CAGAYAN | 349,123,099.49 | 34,912,309.95 | 105,322,538.61 | 33.15% |
| VILLAGE BANK INC (A RURAL BANK) | 349,950,000.00 | 34,995,000.00 | 106,430,495.60 | 32.88% |
| RB OF BROOKE'S POINT (PALAWAN) INC | 326,810,200.33 | 32,681,020.03 | 101,629,964.67 | 32.16% |
| BENGUET CENTER BANK INC A RB | 203,887,898.01 | 20,388,789.80 | 64,294,387.22 | 31.71% |
| RB OF DULAG (LEYTE) INC | 325,743,738.09 | 32,574,373.81 | 119,420,435.33 | 27.28% |
| COMMTY RB OF DAPITAN CITY INC | 423,834,317.50 | 42,383,431.75 | 161,867,993.76 | 26.18% |
A 20% write-off of Classified Loans will severely impact the Total Capital Cushion of twenty-seven banks:
| Philippine Banking System | ||||
| Impact of 20% Classified Loan Loss Severities on Total Capital Cushion | ||||
| March 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 %) |
| SAVIOUR RURAL BANK INC | 508,362,134.12 | 101,672,426.82 | 101,990,261.31 | 99.69% |
| RB OF CENTRAL PANGASINAN (BAYAMBANG) INC | 836,410,095.47 | 167,282,019.09 | 188,221,991.32 | 88.87% |
| RB OF JAEN INC | 245,748,458.38 | 49,149,691.68 | 59,232,407.94 | 82.98% |
| MOUNT MAKILING RURAL BANK INC | 950,903,559.85 | 190,180,711.97 | 278,855,031.66 | 68.20% |
| INTER-ASIA DEVELOPMENT BANK | 310,975,394.74 | 62,195,078.95 | 91,796,389.86 | 67.75% |
| COOP BANK OF CAGAYAN | 349,123,099.49 | 69,824,619.90 | 105,322,538.61 | 66.30% |
| VILLAGE BANK INC (A RURAL BANK) | 349,950,000.00 | 69,990,000.00 | 106,430,495.60 | 65.76% |
| RB OF BROOKE'S POINT (PALAWAN) INC | 326,810,200.33 | 65,362,040.07 | 101,629,964.67 | 64.31% |
| BENGUET CENTER BANK INC A RB | 203,887,898.01 | 40,777,579.60 | 64,294,387.22 | 63.42% |
| RB OF DULAG (LEYTE) INC | 325,743,738.09 | 65,148,747.62 | 119,420,435.33 | 54.55% |
| COMMTY RB OF DAPITAN CITY INC | 423,834,317.50 | 84,766,863.50 | 161,867,993.76 | 52.37% |
| RB OF MIDSAYAP INC | 220,163,699.12 | 44,032,739.82 | 102,966,058.13 | 42.76% |
| RB OF GENERAL TRIAS INC | 261,603,795.02 | 52,320,759.00 | 139,393,957.69 | 37.53% |
| RB OF SAN MATEO(ISABELA) INC | 256,426,832.43 | 51,285,366.49 | 137,514,038.45 | 37.29% |
| RB OF CARDONA (RIZAL) INC | 263,607,057.40 | 52,721,411.48 | 142,508,947.39 | 37.00% |
| YUANTA SAVINGS BANK PHILIPPINES INC | 1,820,245,950.34 | 364,049,190.07 | 992,257,234.14 | 36.69% |
| MALAYAN BANK SAVINGS AND MORT BANK INC | 2,633,507,798.20 | 526,701,559.64 | 1,468,433,302.28 | 35.87% |
| TANAY RB INC | 711,592,793.30 | 142,318,558.66 | 413,538,998.72 | 34.41% |
| BANK OF CHINA LIMITED-MANILA BRANCH | 17,190,443,937.60 | 3,438,088,787.52 | 10,050,902,348.08 | 34.21% |
| PLANBANK "RB OF CANLUBANG PLANTERS INC" | 261,072,015.73 | 52,214,403.15 | 154,425,067.15 | 33.81% |
| RB OF PILAR (BATAAN) INC | 259,270,339.01 | 51,854,067.80 | 154,060,715.31 | 33.66% |
| RANG-AY BANK INC (A RURAL BANK) | 891,533,375.17 | 178,306,675.03 | 538,461,371.90 | 33.11% |
| VALIANT BANK INC (A RURAL BANK) | 388,771,681.35 | 77,754,336.27 | 235,494,542.72 | 33.02% |
| AMA RURAL BANK OF MANDALUYONG INC | 1,355,753,000.00 | 271,150,600.00 | 891,921,691.67 | 30.40% |
| UNITED COCONUT PLANTERS BANK | 12,480,467,391.08 | 2,496,093,478.22 | 8,381,446,388.01 | 29.78% |
| RB OF SAN LUIS (PAMPANGA) INC | 166,312,754.71 | 33,262,550.94 | 115,428,386.16 | 28.82% |
| RB OF MARIA AURORA (AURORA) INC | 329,928,490.23 | 65,985,698.05 | 238,887,658.99 | 27.62% |
| RB OF BAMBANG (NUEVA VIZCAYA) INC | 191,102,472.70 | 38,220,494.54 | 138,569,500.13 | 27.58% |
| RCBC SAVINGS BANK INC | 19,595,015,284.38 | 3,919,003,056.88 | 15,268,125,557.71 | 25.67% |
A 30% write-off of Classified Loans will totally wipe out the Total Capital Cushion of five bank (highlighted in red) and severely affect (reduce by 25% or more) the Total Capital Cushion of thirty-three other banks:
| Philippine Banking System | ||||
| Impact of 30% Classified Loan Loss Severities on Total Capital Cushion | ||||
| March 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 %) |
| SAVIOUR RURAL BANK INC | 508,362,134.12 | 152,508,640.24 | 101,990,261.31 | 149.53% |
| RB OF CENTRAL PANGASINAN (BAYAMBANG) INC | 836,410,095.47 | 250,923,028.64 | 188,221,991.32 | 133.31% |
| RB OF JAEN INC | 245,748,458.38 | 73,724,537.51 | 59,232,407.94 | 124.47% |
| MOUNT MAKILING RURAL BANK INC | 950,903,559.85 | 285,271,067.96 | 278,855,031.66 | 102.30% |
| INTER-ASIA DEVELOPMENT BANK | 310,975,394.74 | 93,292,618.42 | 91,796,389.86 | 101.63% |
| COOP BANK OF CAGAYAN | 349,123,099.49 | 104,736,929.85 | 105,322,538.61 | 99.44% |
| VILLAGE BANK INC (A RURAL BANK) | 349,950,000.00 | 104,985,000.00 | 106,430,495.60 | 98.64% |
| RB OF BROOKE'S POINT (PALAWAN) INC | 326,810,200.33 | 98,043,060.10 | 101,629,964.67 | 96.47% |
| BENGUET CENTER BANK INC A RB | 203,887,898.01 | 61,166,369.40 | 64,294,387.22 | 95.13% |
| RB OF DULAG (LEYTE) INC | 325,743,738.09 | 97,723,121.43 | 119,420,435.33 | 81.83% |
| COMMTY RB OF DAPITAN CITY INC | 423,834,317.50 | 127,150,295.25 | 161,867,993.76 | 78.55% |
| RB OF MIDSAYAP INC | 220,163,699.12 | 66,049,109.74 | 102,966,058.13 | 64.15% |
| RB OF GENERAL TRIAS INC | 261,603,795.02 | 78,481,138.51 | 139,393,957.69 | 56.30% |
| RB OF SAN MATEO(ISABELA) INC | 256,426,832.43 | 76,928,049.73 | 137,514,038.45 | 55.94% |
| RB OF CARDONA (RIZAL) INC | 263,607,057.40 | 79,082,117.22 | 142,508,947.39 | 55.49% |
| YUANTA SAVINGS BANK PHILIPPINES INC | 1,820,245,950.34 | 546,073,785.10 | 992,257,234.14 | 55.03% |
| MALAYAN BANK SAVINGS AND MORT BANK INC | 2,633,507,798.20 | 790,052,339.46 | 1,468,433,302.28 | 53.80% |
| TANAY RB INC | 711,592,793.30 | 213,477,837.99 | 413,538,998.72 | 51.62% |
| BANK OF CHINA LIMITED-MANILA BRANCH | 17,190,443,937.60 | 5,157,133,181.28 | 10,050,902,348.08 | 51.31% |
| PLANBANK "RB OF CANLUBANG PLANTERS INC" | 261,072,015.73 | 78,321,604.72 | 154,425,067.15 | 50.72% |
| RB OF PILAR (BATAAN) INC | 259,270,339.01 | 77,781,101.70 | 154,060,715.31 | 50.49% |
| RANG-AY BANK INC (A RURAL BANK) | 891,533,375.17 | 267,460,012.55 | 538,461,371.90 | 49.67% |
| VALIANT BANK INC (A RURAL BANK) | 388,771,681.35 | 116,631,504.41 | 235,494,542.72 | 49.53% |
| AMA RURAL BANK OF MANDALUYONG INC | 1,355,753,000.00 | 406,725,900.00 | 891,921,691.67 | 45.60% |
| UNITED COCONUT PLANTERS BANK | 12,480,467,391.08 | 3,744,140,217.32 | 8,381,446,388.01 | 44.67% |
| RB OF SAN LUIS (PAMPANGA) INC | 166,312,754.71 | 49,893,826.41 | 115,428,386.16 | 43.22% |
| RB OF MARIA AURORA (AURORA) INC | 329,928,490.23 | 98,978,547.07 | 238,887,658.99 | 41.43% |
| RB OF BAMBANG (NUEVA VIZCAYA) INC | 191,102,472.70 | 57,330,741.81 | 138,569,500.13 | 41.37% |
| RCBC SAVINGS BANK INC | 19,595,015,284.38 | 5,878,504,585.31 | 15,268,125,557.71 | 38.50% |
| COUNTRY BUILDERS BANK INC (A RURAL BANK) | 431,463,894.41 | 129,439,168.32 | 368,615,858.88 | 35.11% |
| ILOCOS CONSOLIDATED COOPERATIVE BANK | 281,586,877.24 | 84,476,063.17 | 277,471,591.70 | 30.44% |
| GATEWAY RURAL BANK INC | 114,742,453.88 | 34,422,736.16 | 121,478,790.50 | 28.34% |
| GUAGUA RURAL BANK INC | 1,071,735,536.80 | 321,520,661.04 | 1,146,712,356.53 | 28.04% |
| RB OF BAYOMBONG INC | 171,444,064.32 | 51,433,219.30 | 184,378,189.97 | 27.90% |
| BOF INC (A RURAL BANK) | 588,959,606.28 | 176,687,881.88 | 644,838,657.19 | 27.40% |
| EQUICOM SAVINGS BANK INC | 878,429,475.19 | 263,528,842.56 | 990,367,470.10 | 26.61% |
| BATAAN DEVELOPMENT BANK | 102,400,000.00 | 30,720,000.00 | 116,600,014.14 | 26.35% |
| UCPB SAVINGS BANK | 2,911,217,229.07 | 873,365,168.72 | 3,408,915,226.74 | 25.62% |
A 40% write-off of Classified Loans will totally wipe out the Total Capital Cushion of eleven banks and severely affect (reduce by 25% or more) the Total Capital Cushion of forty-three more banks:
| Philippine Banking System | ||||
| Impact of 40% Classified Loan Loss Severities on Total Capital Cushion | ||||
| March 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 %) |
| SAVIOUR RURAL BANK INC | 508,362,134.12 | 203,344,853.65 | 101,990,261.31 | 199.38% |
| RB OF CENTRAL PANGASINAN (BAYAMBANG) INC | 836,410,095.47 | 334,564,038.19 | 188,221,991.32 | 177.75% |
| RB OF JAEN INC | 245,748,458.38 | 98,299,383.35 | 59,232,407.94 | 165.96% |
| MOUNT MAKILING RURAL BANK INC | 950,903,559.85 | 380,361,423.94 | 278,855,031.66 | 136.40% |
| INTER-ASIA DEVELOPMENT BANK | 310,975,394.74 | 124,390,157.90 | 91,796,389.86 | 135.51% |
| COOP BANK OF CAGAYAN | 349,123,099.49 | 139,649,239.80 | 105,322,538.61 | 132.59% |
| VILLAGE BANK INC (A RURAL BANK) | 349,950,000.00 | 139,980,000.00 | 106,430,495.60 | 131.52% |
| RB OF BROOKE'S POINT (PALAWAN) INC | 326,810,200.33 | 130,724,080.13 | 101,629,964.67 | 128.63% |
| BENGUET CENTER BANK INC A RB | 203,887,898.01 | 81,555,159.20 | 64,294,387.22 | 126.85% |
| RB OF DULAG (LEYTE) INC | 325,743,738.09 | 130,297,495.24 | 119,420,435.33 | 109.11% |
| COMMTY RB OF DAPITAN CITY INC | 423,834,317.50 | 169,533,727.00 | 161,867,993.76 | 104.74% |
| RB OF MIDSAYAP INC | 220,163,699.12 | 88,065,479.65 | 102,966,058.13 | 85.53% |
| RB OF GENERAL TRIAS INC | 261,603,795.02 | 104,641,518.01 | 139,393,957.69 | 75.07% |
| RB OF SAN MATEO(ISABELA) INC | 256,426,832.43 | 102,570,732.97 | 137,514,038.45 | 74.59% |
| RB OF CARDONA (RIZAL) INC | 263,607,057.40 | 105,442,822.96 | 142,508,947.39 | 73.99% |
| YUANTA SAVINGS BANK PHILIPPINES INC | 1,820,245,950.34 | 728,098,380.14 | 992,257,234.14 | 73.38% |
| MALAYAN BANK SAVINGS AND MORT BANK INC | 2,633,507,798.20 | 1,053,403,119.28 | 1,468,433,302.28 | 71.74% |
| TANAY RB INC | 711,592,793.30 | 284,637,117.32 | 413,538,998.72 | 68.83% |
| BANK OF CHINA LIMITED-MANILA BRANCH | 17,190,443,937.60 | 6,876,177,575.04 | 10,050,902,348.08 | 68.41% |
| PLANBANK "RB OF CANLUBANG PLANTERS INC" | 261,072,015.73 | 104,428,806.29 | 154,425,067.15 | 67.62% |
| RB OF PILAR (BATAAN) INC | 259,270,339.01 | 103,708,135.60 | 154,060,715.31 | 67.32% |
| RANG-AY BANK INC (A RURAL BANK) | 891,533,375.17 | 356,613,350.07 | 538,461,371.90 | 66.23% |
| VALIANT BANK INC (A RURAL BANK) | 388,771,681.35 | 155,508,672.54 | 235,494,542.72 | 66.03% |
| AMA RURAL BANK OF MANDALUYONG INC | 1,355,753,000.00 | 542,301,200.00 | 891,921,691.67 | 60.80% |
| UNITED COCONUT PLANTERS BANK | 12,480,467,391.08 | 4,992,186,956.43 | 8,381,446,388.01 | 59.56% |
| RB OF SAN LUIS (PAMPANGA) INC | 166,312,754.71 | 66,525,101.88 | 115,428,386.16 | 57.63% |
| RB OF MARIA AURORA (AURORA) INC | 329,928,490.23 | 131,971,396.09 | 238,887,658.99 | 55.24% |
| RB OF BAMBANG (NUEVA VIZCAYA) INC | 191,102,472.70 | 76,440,989.08 | 138,569,500.13 | 55.16% |
| RCBC SAVINGS BANK INC | 19,595,015,284.38 | 7,838,006,113.75 | 15,268,125,557.71 | 51.34% |
| COUNTRY BUILDERS BANK INC (A RURAL BANK) | 431,463,894.41 | 172,585,557.76 | 368,615,858.88 | 46.82% |
| ILOCOS CONSOLIDATED COOPERATIVE BANK | 281,586,877.24 | 112,634,750.90 | 277,471,591.70 | 40.59% |
| GATEWAY RURAL BANK INC | 114,742,453.88 | 45,896,981.55 | 121,478,790.50 | 37.78% |
| GUAGUA RURAL BANK INC | 1,071,735,536.80 | 428,694,214.72 | 1,146,712,356.53 | 37.38% |
| RB OF BAYOMBONG INC | 171,444,064.32 | 68,577,625.73 | 184,378,189.97 | 37.19% |
| BOF INC (A RURAL BANK) | 588,959,606.28 | 235,583,842.51 | 644,838,657.19 | 36.53% |
| EQUICOM SAVINGS BANK INC | 878,429,475.19 | 351,371,790.08 | 990,367,470.10 | 35.48% |
| BATAAN DEVELOPMENT BANK | 102,400,000.00 | 40,960,000.00 | 116,600,014.14 | 35.13% |
| UCPB SAVINGS BANK | 2,911,217,229.07 | 1,164,486,891.63 | 3,408,915,226.74 | 34.16% |
| RB OF MAGDALENA (LAGUNA) INC | 106,568,951.33 | 42,627,580.53 | 128,192,643.52 | 33.25% |
| RBG IMPERIAL BANK INC(A RURAL BANK) | 75,173,167.73 | 30,069,267.09 | 92,643,136.85 | 32.46% |
| COMMON WEALTH RURAL BANK INC | 104,729,465.19 | 41,891,786.08 | 133,731,740.14 | 31.33% |
| RB OF MIAGAO (ILOILO) INC | 84,744,984.92 | 33,897,993.97 | 108,272,092.04 | 31.31% |
| BANGKO MABUHAY (A RURAL BANK) INC | 268,170,723.71 | 107,268,289.48 | 343,335,053.72 | 31.24% |
| SUGBUANON RB INC | 86,037,427.60 | 34,414,971.04 | 113,239,621.31 | 30.39% |
| ASIA UNITED BANK CORPORATION | 23,221,270,110.76 | 9,288,508,044.30 | 31,115,740,576.17 | 29.85% |
| GM BANK OF LUZON INC (A RURAL BANK) | 364,441,470.08 | 145,776,588.03 | 505,251,055.09 | 28.85% |
| PEOPLES BANK OF CARAGA INC (A RURAL BANK) | 303,768,304.08 | 121,507,321.63 | 421,692,152.80 | 28.81% |
| PHIL BANK OF COMMUNICATIONS | 9,182,681,270.78 | 3,673,072,508.31 | 12,773,089,763.85 | 28.76% |
| PHIL STAR DEVELOPMENT BANK INC | 75,742,055.47 | 30,296,822.19 | 109,439,031.42 | 27.68% |
| CHINA BANK SAVINGS INC | 8,068,068,347.71 | 3,227,227,339.08 | 11,700,972,862.23 | 27.58% |
| PBCOM RURAL BANK INC | 631,246,328.71 | 252,498,531.48 | 929,617,827.55 | 27.16% |
| LEGAZPI SAVINGS BANK INC | 543,831,000.00 | 217,532,400.00 | 821,646,648.86 | 26.48% |
| RB OF SAN PASCUAL(OBANDO BULACAN)INC | 49,753,382.79 | 19,901,353.12 | 78,286,430.96 | 25.42% |
| NEW RB OF SAN LEONARDO(N.E.) INC | 161,153,044.79 | 64,461,217.92 | 256,621,413.00 | 25.12% |
A 50% write-off of Classified Loans will totally wipe out the Total Capital Cushion of twelve banks and severely affect (reduce by 25% or more) the Total Capital Cushion of fifty-four more banks:
| Philippine Banking System | ||||
| Impact of 50% Classified Loan Loss Severities on Total Capital Cushion | ||||
| March 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 %) |
| SAVIOUR RURAL BANK INC | 508,362,134.12 | 254,181,067.06 | 101,990,261.31 | 249.22% |
| RB OF CENTRAL PANGASINAN (BAYAMBANG) INC | 836,410,095.47 | 418,205,047.74 | 188,221,991.32 | 222.19% |
| RB OF JAEN INC | 245,748,458.38 | 122,874,229.19 | 59,232,407.94 | 207.44% |
| MOUNT MAKILING RURAL BANK INC | 950,903,559.85 | 475,451,779.93 | 278,855,031.66 | 170.50% |
| INTER-ASIA DEVELOPMENT BANK | 310,975,394.74 | 155,487,697.37 | 91,796,389.86 | 169.38% |
| COOP BANK OF CAGAYAN | 349,123,099.49 | 174,561,549.75 | 105,322,538.61 | 165.74% |
| VILLAGE BANK INC (A RURAL BANK) | 349,950,000.00 | 174,975,000.00 | 106,430,495.60 | 164.40% |
| RB OF BROOKE'S POINT (PALAWAN) INC | 326,810,200.33 | 163,405,100.17 | 101,629,964.67 | 160.78% |
| BENGUET CENTER BANK INC A RB | 203,887,898.01 | 101,943,949.01 | 64,294,387.22 | 158.56% |
| RB OF DULAG (LEYTE) INC | 325,743,738.09 | 162,871,869.05 | 119,420,435.33 | 136.39% |
| COMMTY RB OF DAPITAN CITY INC | 423,834,317.50 | 211,917,158.75 | 161,867,993.76 | 130.92% |
| RB OF MIDSAYAP INC | 220,163,699.12 | 110,081,849.56 | 102,966,058.13 | 106.91% |
| RB OF GENERAL TRIAS INC | 261,603,795.02 | 130,801,897.51 | 139,393,957.69 | 93.84% |
| RB OF SAN MATEO(ISABELA) INC | 256,426,832.43 | 128,213,416.22 | 137,514,038.45 | 93.24% |
| RB OF CARDONA (RIZAL) INC | 263,607,057.40 | 131,803,528.70 | 142,508,947.39 | 92.49% |
| YUANTA SAVINGS BANK PHILIPPINES INC | 1,820,245,950.34 | 910,122,975.17 | 992,257,234.14 | 91.72% |
| MALAYAN BANK SAVINGS AND MORT BANK INC | 2,633,507,798.20 | 1,316,753,899.10 | 1,468,433,302.28 | 89.67% |
| TANAY RB INC | 711,592,793.30 | 355,796,396.65 | 413,538,998.72 | 86.04% |
| BANK OF CHINA LIMITED-MANILA BRANCH | 17,190,443,937.60 | 8,595,221,968.80 | 10,050,902,348.08 | 85.52% |
| PLANBANK "RB OF CANLUBANG PLANTERS INC" | 261,072,015.73 | 130,536,007.87 | 154,425,067.15 | 84.53% |
| RB OF PILAR (BATAAN) INC | 259,270,339.01 | 129,635,169.51 | 154,060,715.31 | 84.15% |
| RANG-AY BANK INC (A RURAL BANK) | 891,533,375.17 | 445,766,687.59 | 538,461,371.90 | 82.79% |
| VALIANT BANK INC (A RURAL BANK) | 388,771,681.35 | 194,385,840.68 | 235,494,542.72 | 82.54% |
| AMA RURAL BANK OF MANDALUYONG INC | 1,355,753,000.00 | 677,876,500.00 | 891,921,691.67 | 76.00% |
| UNITED COCONUT PLANTERS BANK | 12,480,467,391.08 | 6,240,233,695.54 | 8,381,446,388.01 | 74.45% |
| RB OF SAN LUIS (PAMPANGA) INC | 166,312,754.71 | 83,156,377.36 | 115,428,386.16 | 72.04% |
| RB OF MARIA AURORA (AURORA) INC | 329,928,490.23 | 164,964,245.12 | 238,887,658.99 | 69.06% |
| RB OF BAMBANG (NUEVA VIZCAYA) INC | 191,102,472.70 | 95,551,236.35 | 138,569,500.13 | 68.96% |
| RCBC SAVINGS BANK INC | 19,595,015,284.38 | 9,797,507,642.19 | 15,268,125,557.71 | 64.17% |
| COUNTRY BUILDERS BANK INC (A RURAL BANK) | 431,463,894.41 | 215,731,947.21 | 368,615,858.88 | 58.52% |
| ILOCOS CONSOLIDATED COOPERATIVE BANK | 281,586,877.24 | 140,793,438.62 | 277,471,591.70 | 50.74% |
| GATEWAY RURAL BANK INC | 114,742,453.88 | 57,371,226.94 | 121,478,790.50 | 47.23% |
| GUAGUA RURAL BANK INC | 1,071,735,536.80 | 535,867,768.40 | 1,146,712,356.53 | 46.73% |
| RB OF BAYOMBONG INC | 171,444,064.32 | 85,722,032.16 | 184,378,189.97 | 46.49% |
| BOF INC (A RURAL BANK) | 588,959,606.28 | 294,479,803.14 | 644,838,657.19 | 45.67% |
| EQUICOM SAVINGS BANK INC | 878,429,475.19 | 439,214,737.60 | 990,367,470.10 | 44.35% |
| BATAAN DEVELOPMENT BANK | 102,400,000.00 | 51,200,000.00 | 116,600,014.14 | 43.91% |
| UCPB SAVINGS BANK | 2,911,217,229.07 | 1,455,608,614.54 | 3,408,915,226.74 | 42.70% |
| RB OF MAGDALENA (LAGUNA) INC | 106,568,951.33 | 53,284,475.67 | 128,192,643.52 | 41.57% |
| RBG IMPERIAL BANK INC(A RURAL BANK) | 75,173,167.73 | 37,586,583.87 | 92,643,136.85 | 40.57% |
| COMMON WEALTH RURAL BANK INC | 104,729,465.19 | 52,364,732.60 | 133,731,740.14 | 39.16% |
| RB OF MIAGAO (ILOILO) INC | 84,744,984.92 | 42,372,492.46 | 108,272,092.04 | 39.14% |
| BANGKO MABUHAY (A RURAL BANK) INC | 268,170,723.71 | 134,085,361.86 | 343,335,053.72 | 39.05% |
| SUGBUANON RB INC | 86,037,427.60 | 43,018,713.80 | 113,239,621.31 | 37.99% |
| ASIA UNITED BANK CORPORATION | 23,221,270,110.76 | 11,610,635,055.38 | 31,115,740,576.17 | 37.31% |
| GM BANK OF LUZON INC (A RURAL BANK) | 364,441,470.08 | 182,220,735.04 | 505,251,055.09 | 36.07% |
| PEOPLES BANK OF CARAGA INC (A RURAL BANK) | 303,768,304.08 | 151,884,152.04 | 421,692,152.80 | 36.02% |
| PHIL BANK OF COMMUNICATIONS | 9,182,681,270.78 | 4,591,340,635.39 | 12,773,089,763.85 | 35.95% |
| PHIL STAR DEVELOPMENT BANK INC | 75,742,055.47 | 37,871,027.74 | 109,439,031.42 | 34.60% |
| CHINA BANK SAVINGS INC | 8,068,068,347.71 | 4,034,034,173.86 | 11,700,972,862.23 | 34.48% |
| PBCOM RURAL BANK INC | 631,246,328.71 | 315,623,164.36 | 929,617,827.55 | 33.95% |
| LEGAZPI SAVINGS BANK INC | 543,831,000.00 | 271,915,500.00 | 821,646,648.86 | 33.09% |
| RB OF SAN PASCUAL(OBANDO BULACAN)INC | 49,753,382.79 | 24,876,691.40 | 78,286,430.96 | 31.78% |
| NEW RB OF SAN LEONARDO(N.E.) INC | 161,153,044.79 | 80,576,522.40 | 256,621,413.00 | 31.40% |
| LUZON DEVELOPMENT BANK | 416,056,368.54 | 208,028,184.27 | 724,473,558.19 | 28.71% |
| PHIL SAVINGS BANK | 20,174,036,169.24 | 10,087,018,084.62 | 35,606,728,557.31 | 28.33% |
| HIGHLAND RURAL BANK INC | 91,730,620.40 | 45,865,310.20 | 162,014,267.73 | 28.31% |
| RB OF ITOGON (BENGUET) INC | 73,738,915.17 | 36,869,457.59 | 130,782,659.77 | 28.19% |
| PRODUCERS SAVINGS BANK CORPORATION | 1,238,704,038.02 | 619,352,019.01 | 2,229,352,737.59 | 27.78% |
| DUMAGUETE CITY DEV BANK INC | 174,110,752.94 | 87,055,376.47 | 317,685,816.79 | 27.40% |
| RNG COASTAL BANK INC(A RURAL BANK) | 92,352,342.55 | 46,176,171.28 | 173,136,852.63 | 26.67% |
| ENTREPRENEUR RB INC | 47,948,549.11 | 23,974,274.56 | 91,204,643.94 | 26.29% |
| PENBANK INC (A PDB) (FORMERLY: PENINSULA RB INC) | 317,151,823.01 | 158,575,911.51 | 613,109,720.77 | 25.86% |
| COOPERATIVE BANK OF BOHOL | 55,948,079.34 | 27,974,039.67 | 108,855,628.62 | 25.70% |
| COOPERATIVE BANK OF NUEVA VIZCAYA | 55,169,411.25 | 27,584,705.63 | 108,390,035.23 | 25.45% |
| MALARAYAT RB INC | 101,784,457.88 | 50,892,228.94 | 200,420,963.79 | 25.39% |
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 March 31, 2019. Moreover, their capital can be overstated. See a previous blog post "Overstated Capital of Philippine Banks as of March 31, 2019".
As such, any reduction in their capital cushion could knock down an already weak bank.
Source: www.bsp.gov.ph
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