Overstated Capital of Philippine Banks as of September 30, 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, four banks have Deferred Charges as of September 30, 2019. Fortunately, only one bank has deferred charges large enough to adversely impact its Stockholder's Equity (SE): Rural Bank of Mabalacat. It's Deferred Charges will reduce 32.57% of its Stockholder's Equity.
 
Retained Earnings
 
Three banks on the list have sufficient Retained Earnings (RE) to absorb their unbooked losses as of September 30, 2019. Rural Bank of Mabalacat has negative Retained Earnings of Php 14.82 million, which will increase its Retained Earnings to a negative Php 36.24 million.

Source: www.bsp.gov.ph