The Financial Strength of Philippine Banks according to BSP: From Weakest to Strongest - As of June 30, 2018

A bank's Capital Adequacy Ratio is a measure of a bank's capital and financial strength. BSP requires Philippine banks to measure their capital adequacy in at least three defined ratios:

1. Total Capital Adequacy Ratio
2. Tier One Capital Adequacy Ratio
3. Common Tier One Adequacy Ratio.

For a more detailed understanding of these ratios, you can consult BSP's own implementation guidelines, Investopedia.com, or numerous past posts about this subject.

The basic idea behind these ratios is that the higher the ratio, the more solid the bank is in financial strength, the greater it's ability to absorb losses.  BSP's own minimum for most of these ratios is 6.00 but it generally recommends a minimum of 10.00, especially for large and more systemically important banks (those that are Too Big To Fail or TBTF for short).

In the aggregate, Philippine Universal and Commercial Banks are well capitalized. As of June 30, 2018, Total CAR is 15.75%, within the range of 15% to 20% of the last 31 years.

 


Every quarter, several Philippine Banks do not meet these guidelines. As of June 30, 2018, the banks that failed to meet BSP's recommended minimum capital requirements are as follows:


 TOTAL CAR:  

1. United Coconut Planters Bank (Total CAR of 7.19) 
2. Philippine Veterans Bank (Total CAR of 8.25)

TIER ONE CAR

Seven banks reported Tier One CAR of 0.00 as of June 30, 2018. Of those that did report Tier One CAR greater than 0.00, three banks have less than the BSP-recommended Tier One CARs of 10.00. These banks are:

1. United Coconut Planters Bank (Tier One CAR of 7.19)
2. Sterling Bank of Asia (Tier One CAR of 7.34)
3. Philippine Veterans Bank (Tier One CAR of 7.62)

COMMON EQUITY TIER ONE CAR

The BSP's reporting guidelines on the Common Equity Tier One CAR (CET1) only took effect as of January 1, 2014.  Banks only started reporting this ratio in their Published Statements of Condition for June 30, 2014.  Forty-five banks reported their CET1 Ratio as 0.00 for June 30, 2018.

However, of those banks that did report a CET1 Ratio other than 0.00, one bank reported CET1 Ratios below BSP's recommended ratio:

1. Philippine Veterans Bank (Common Equity Tier One CAR of 6.31)

The Total CAR, Tier 1 CAR, and Common Equity Tier 1 CAR of Philippine Banks as of June  30, 2018 is as follows:(Banks that do not meet BSP's minimum capital requirements are highlighted in yellow):

 

Philippine Banking System
TOTAL CAR
June 30, 2018
Bank	Type of Bank	Total CAR
UNITED COCONUT PLANTERS BANK	U/KB	7.19
PHILIPPINE VETERANS BANK	U/KB	8.25
ENTERPRISE BANK INC (A THRIFT BANK)	Thrift Bank	11.05
EQUICOM SAVINGS BANK INC	Thrift Bank	11.36
LAND BANK OF THE  PHILIPPINES	U/KB	11.46
CHINA BANK SAVINGS INC	Thrift Bank	11.59
STERLING BANK OF ASIA INC (A SAVINGS BANK)	Thrift Bank	11.88
MUFG BANK INC	U/KB	12.08
PHIL NATIONAL BANK	U/KB	12.19
EAST WEST BANKING CORP	U/KB	13.16
RCBC SAVINGS BANK INC	Thrift Bank	13.29
CHINA BANKING CORP	U/KB	13.50
BDO UNIBANK INC	U/KB	13.56
FARMERS SAVINGS & LOAN BANK INC	Thrift Bank	13.60
MIZUHO BANK LTD - MANILA BRANCH	U/KB	13.66
PHIL SAVINGS BANK	Thrift Bank	13.67
PRODUCERS SAVINGS BANK CORPORATION	Thrift Bank	13.81
UNION BANK OF THE PHILS	U/KB	13.81
UCPB SAVINGS BANK	Thrift Bank	14.15
RIZAL COMM'L BANKING CORP	U/KB	14.34
PHILIPPINE BUSINESS BANK INC A SAVINGS BANK	Thrift Bank	14.37
ASIA UNITED BANK CORPORATION	U/KB	15.01
DEVELOPMENT BANK OF THE PHIL	U/KB	15.05
PHIL BANK OF COMMUNICATIONS	U/KB	15.10
MAYBANK PHILIPPINES INC	U/KB	15.24
MALAYAN BANK SAVINGS AND MORT BANK INC	Thrift Bank	15.73
CITYSTATE SAVINGS BANK INC	Thrift Bank	15.87
CITIBANK, N.A.	U/KB	16.09
KEB HANA BANK - MANILA BRANCH	U/KB	16.47
BANK OF THE PHIL ISLANDS	U/KB	16.54
BANGKO KABAYAN INC	Thrift Bank	16.97
STANDARD CHARTERED BANK	U/KB	16.99
BDO PRIVATE BANK, INC.	U/KB	17.02
BPI FAMILY SAVINGS BANK INC	Thrift Bank	17.06
METROPOLITAN BANK & TRUST CO	U/KB	17.24
ROBINSONS BANK CORPORATION	U/KB	17.29
CTBC BANK (PHILIPPINES) CORP	U/KB	17.68
SECURITY BANK CORP	U/KB	17.79
BANK OF COMMERCE	U/KB	17.81
CARD SME BANK INC A THRIFT BANK	Thrift Bank	17.92
BATAAN DEVELOPMENT BANK	Thrift Bank	19.33
HONGKONG & SHANGHAI BANKING CORP	U/KB	19.55
BANK OF MAKATI (A SAVINGS BANK) INC	Thrift Bank	20.13
PHILIPPINE RESOURCES SAVINGS BANKING CORPORATION (PR SAVINGS	Thrift Bank	20.65
PENBANK INC (A PDB) (FORMERLY: PENINSULA RB INC)	Thrift Bank	21.00
MEGA INT'L COMM'L BANK CO LTD	U/KB	21.17
BPI DIRECT BANKO INC	Thrift Bank	21.44
WEALTH DEVELOPMENT BANK CORPORATION	Thrift Bank	21.77
HIYAS BANKING CORPORATION	Thrift Bank	21.88
PNB SAVINGS BANK	Thrift Bank	21.88
1st VALLEY BANK INC A DEVELOPMENT BANK	Thrift Bank	22.56
ANZ BANKING GROUP LTD	U/KB	22.58
INTER-ASIA DEVELOPMENT BANK	Thrift Bank	23.25
BUSINESS AND CONSUMERS BANK (A DB)	Thrift Bank	25.35
SUN SAVINGS BANK INC	Thrift Bank	26.36
UNIVERSITY SAVINGS BANK INC	Thrift Bank	26.60
METRO CEBU PUBLIC SAVINGS BANK	Thrift Bank	27.40
MARITIME SAVINGS BANK CORPORATION	Thrift Bank	28.18
DUMAGUETE CITY DEV BANK INC	Thrift Bank	29.71
FIRST CONSOLIDATED BANK INC (A PDB)	Thrift Bank	30.53
JP MORGAN CHASE BANK NATIONAL ASSN.	U/KB	31.58
PHIL TRUST COMPANY	U/KB	32.08
LEGAZPI SAVINGS BANK INC	Thrift Bank	32.95
QUEEN CITY DEVELOPMENT BANK INC OR QUEENBANK A THRIFT BANK	Thrift Bank	33.20
LIFE SAVINGS BANK INC	Thrift Bank	33.30
HSBC SAVINGS BANK PHILIPPINES	Thrift Bank	33.61
LEMERY SAVINGS & LOAN BANK, INC.	Thrift Bank	36.05
CORDILLERA SAVINGS BANK INC	Thrift Bank	36.11
MALASIQUI PROGRESSIVE SLB, INC	Thrift Bank	36.43
NORTHPOINT DEV'T BANK INC	Thrift Bank	37.61
BANGKOK BANK PUBLIC CO LTD	U/KB	37.73
MERCHANTS SAVINGS & LOAN ASSN INC	Thrift Bank	39.81
PAMPANGA DEVELOPMENT BANK	Thrift Bank	44.77
SHINHAN BANK - MANILA BRANCH	U/KB	46.71
YUANTA SAVINGS BANK PHILIPPINES INC	Thrift Bank	47.24
ING BANK N.V.	U/KB	49.47
ALLBANK	Thrift Bank	51.27
BANK OF CHINA LIMITED	U/KB	53.56
AL-AMANAH ISLAMIC INVESTMENT BANK OF THE PHILS	U/KB	56.56
SUMITOMO MITSUI BANKING CORPORATION - MANILA BRANCH	U/KB	57.81
QUEZON COCONUT BANK INC (A THRIFT BANK)	Thrift Bank	59.74
BANK OF AMERICA N.A.	U/KB	60.33
BANK ONE SAVINGS AND TRUST CORP.	Thrift Bank	60.57
PACIFIC ACE SAVINGS BANK INC	Thrift Bank	68.12
CENTURY SAVINGS BANK CORPORATION	Thrift Bank	75.14
PHIL STAR DEVELOPMENT BANK INC	Thrift Bank	78.75
INDUSTRIAL BANK OF KOREA MANILA BRANCH	U/KB	84.07
ISLA BANK(A THRIFT BANK) INC	Thrift Bank	118.06
UNITED OVERSEAS BANK LIMITED MANILA BRANCH	U/KB	128.24
FIRST COMMERCIAL BANK	U/KB	195.48
CATHAY UNITED BANK CO LTD - MANILA BRANCH	U/KB	334.63
HUA NAN COMMERCIAL BANK LTD MANILA BRANCH	U/KB	371.60
CITY SAVINGS BANK INC	Thrift Bank	NA
DEUTSCHE BANK AG	U/KB	NA
LUZON DEVELOPMENT BANK	Thrift Bank	NA
MAXIMUM SAVINGS BANK	Thrift Bank	NA
OVERSEAS FILIPINO BANK	Thrift Bank	NA
THE PALAWAN BANK (PALAWAN DB) INC	Thrift Bank	NA

 

Philippine Banking System
Tier One CAR
June 30, 2018
Bank	Type of Bank	Tier One CAR
1st VALLEY BANK INC A DEVELOPMENT BANK	Thrift Bank	0.00
ALLBANK	Thrift Bank	0.00
BUSINESS AND CONSUMERS BANK (A DB)	Thrift Bank	0.00
ENTERPRISE BANK INC (A THRIFT BANK)	Thrift Bank	0.00
EQUICOM SAVINGS BANK INC	Thrift Bank	0.00
INTER-ASIA DEVELOPMENT BANK	Thrift Bank	0.00
MARITIME SAVINGS BANK CORPORATION	Thrift Bank	0.00
UNITED COCONUT PLANTERS BANK	U/KB	7.19
STERLING BANK OF ASIA INC (A SAVINGS BANK)	Thrift Bank	7.34
PHILIPPINE VETERANS BANK	U/KB	7.62
LAND BANK OF THE  PHILIPPINES	U/KB	10.61
CHINA BANK SAVINGS INC	Thrift Bank	10.66
RIZAL COMM'L BANKING CORP	U/KB	10.81
PHIL SAVINGS BANK	Thrift Bank	10.97
EAST WEST BANKING CORP	U/KB	11.01
UNION BANK OF THE PHILS	U/KB	11.23
DEVELOPMENT BANK OF THE PHIL	U/KB	11.37
MUFG BANK INC	U/KB	11.39
PHIL NATIONAL BANK	U/KB	11.42
ASIA UNITED BANK CORPORATION	U/KB	11.53
MAXIMUM SAVINGS BANK	Thrift Bank	11.87
MAYBANK PHILIPPINES INC	U/KB	11.98
BDO UNIBANK INC	U/KB	12.11
PHIL BANK OF COMMUNICATIONS	U/KB	12.25
RCBC SAVINGS BANK INC	Thrift Bank	12.65
MIZUHO BANK LTD - MANILA BRANCH	U/KB	12.73
CHINA BANKING CORP	U/KB	12.76
PRODUCERS SAVINGS BANK CORPORATION	Thrift Bank	13.26
UNIVERSITY SAVINGS BANK INC	Thrift Bank	13.30
UCPB SAVINGS BANK	Thrift Bank	13.39
PHILIPPINE BUSINESS BANK INC A SAVINGS BANK	Thrift Bank	13.44
FARMERS SAVINGS & LOAN BANK INC	Thrift Bank	13.60
METROPOLITAN BANK & TRUST CO	U/KB	14.63
MALAYAN BANK SAVINGS AND MORT BANK INC	Thrift Bank	15.23
CITIBANK, N.A.	U/KB	15.32
CITYSTATE SAVINGS BANK INC	Thrift Bank	15.38
SECURITY BANK CORP	U/KB	15.53
BANK OF THE PHIL ISLANDS	U/KB	15.65
KEB HANA BANK - MANILA BRANCH	U/KB	15.94
BPI FAMILY SAVINGS BANK INC	Thrift Bank	16.21
ROBINSONS BANK CORPORATION	U/KB	16.41
PHILIPPINE RESOURCES SAVINGS BANKING CORPORATION (PR SAVINGS	Thrift Bank	16.49
STANDARD CHARTERED BANK	U/KB	16.58
BANGKO KABAYAN INC	Thrift Bank	16.70
CTBC BANK (PHILIPPINES) CORP	U/KB	16.79
BDO PRIVATE BANK, INC.	U/KB	16.99
BANK OF COMMERCE	U/KB	17.11
CARD SME BANK INC A THRIFT BANK	Thrift Bank	17.18
HONGKONG & SHANGHAI BANKING CORP	U/KB	18.89
BANK OF MAKATI (A SAVINGS BANK) INC	Thrift Bank	20.13
PENBANK INC (A PDB) (FORMERLY: PENINSULA RB INC)	Thrift Bank	20.20
MEGA INT'L COMM'L BANK CO LTD	U/KB	20.22
BPI DIRECT BANKO INC	Thrift Bank	20.57
WEALTH DEVELOPMENT BANK CORPORATION	Thrift Bank	20.86
BATAAN DEVELOPMENT BANK	Thrift Bank	21.33
PNB SAVINGS BANK	Thrift Bank	21.39
HIYAS BANKING CORPORATION	Thrift Bank	21.52
ANZ BANKING GROUP LTD	U/KB	22.27
SUN SAVINGS BANK INC	Thrift Bank	25.47
METRO CEBU PUBLIC SAVINGS BANK	Thrift Bank	27.36
DUMAGUETE CITY DEV BANK INC	Thrift Bank	29.19
FIRST CONSOLIDATED BANK INC (A PDB)	Thrift Bank	29.65
JP MORGAN CHASE BANK NATIONAL ASSN.	U/KB	31.45
PHIL TRUST COMPANY	U/KB	31.73
LEGAZPI SAVINGS BANK INC	Thrift Bank	32.14
QUEEN CITY DEVELOPMENT BANK INC OR QUEENBANK A THRIFT BANK	Thrift Bank	32.47
HSBC SAVINGS BANK PHILIPPINES	Thrift Bank	32.91
LIFE SAVINGS BANK INC	Thrift Bank	33.06
LEMERY SAVINGS & LOAN BANK, INC.	Thrift Bank	34.86
CORDILLERA SAVINGS BANK INC	Thrift Bank	35.59
MALASIQUI PROGRESSIVE SLB, INC	Thrift Bank	36.43
BANGKOK BANK PUBLIC CO LTD	U/KB	36.76
NORTHPOINT DEV'T BANK INC	Thrift Bank	37.02
MERCHANTS SAVINGS & LOAN ASSN INC	Thrift Bank	39.16
SHINHAN BANK - MANILA BRANCH	U/KB	46.21
YUANTA SAVINGS BANK PHILIPPINES INC	Thrift Bank	47.24
ING BANK N.V.	U/KB	49.04
BANK OF CHINA LIMITED	U/KB	52.75
AL-AMANAH ISLAMIC INVESTMENT BANK OF THE PHILS	U/KB	55.91
SUMITOMO MITSUI BANKING CORPORATION - MANILA BRANCH	U/KB	56.99
QUEZON COCONUT BANK INC (A THRIFT BANK)	Thrift Bank	59.06
BANK ONE SAVINGS AND TRUST CORP.	Thrift Bank	59.94
BANK OF AMERICA N.A.	U/KB	60.06
PACIFIC ACE SAVINGS BANK INC	Thrift Bank	67.89
CENTURY SAVINGS BANK CORPORATION	Thrift Bank	74.16
PHIL STAR DEVELOPMENT BANK INC	Thrift Bank	78.56
INDUSTRIAL BANK OF KOREA MANILA BRANCH	U/KB	83.20
ISLA BANK(A THRIFT BANK) INC	Thrift Bank	117.65
UNITED OVERSEAS BANK LIMITED MANILA BRANCH	U/KB	127.37
FIRST COMMERCIAL BANK	U/KB	194.75
PAMPANGA DEVELOPMENT BANK	Thrift Bank	210.07
CATHAY UNITED BANK CO LTD - MANILA BRANCH	U/KB	333.91
HUA NAN COMMERCIAL BANK LTD MANILA BRANCH	U/KB	371.60
CITY SAVINGS BANK INC	Thrift Bank	NA
DEUTSCHE BANK AG	U/KB	NA
LUZON DEVELOPMENT BANK	Thrift Bank	NA
OVERSEAS FILIPINO BANK	Thrift Bank	NA
THE PALAWAN BANK (PALAWAN DB) INC	Thrift Bank	NA

 

Philippine Banking System
Common Tier 1 Ratio
June 30, 2018
Bank	Type of Bank	Common Tier 1 Ratio
1st VALLEY BANK INC A DEVELOPMENT BANK	Thrift Bank	0.00
ALLBANK	Thrift Bank	0.00
BANGKO KABAYAN INC	Thrift Bank	0.00
BANK OF AMERICA N.A.	U/KB	0.00
BANK OF CHINA LIMITED	U/KB	0.00
BANK OF MAKATI (A SAVINGS BANK) INC	Thrift Bank	0.00
BANK ONE SAVINGS AND TRUST CORP.	Thrift Bank	0.00
BATAAN DEVELOPMENT BANK	Thrift Bank	0.00
BUSINESS AND CONSUMERS BANK (A DB)	Thrift Bank	0.00
CARD SME BANK INC A THRIFT BANK	Thrift Bank	0.00
CENTURY SAVINGS BANK CORPORATION	Thrift Bank	0.00
CITYSTATE SAVINGS BANK INC	Thrift Bank	0.00
CORDILLERA SAVINGS BANK INC	Thrift Bank	0.00
DUMAGUETE CITY DEV BANK INC	Thrift Bank	0.00
ENTERPRISE BANK INC (A THRIFT BANK)	Thrift Bank	0.00
EQUICOM SAVINGS BANK INC	Thrift Bank	0.00
FARMERS SAVINGS & LOAN BANK INC	Thrift Bank	0.00
FIRST CONSOLIDATED BANK INC (A PDB)	Thrift Bank	0.00
HIYAS BANKING CORPORATION	Thrift Bank	0.00
INTER-ASIA DEVELOPMENT BANK	Thrift Bank	0.00
ISLA BANK(A THRIFT BANK) INC	Thrift Bank	0.00
LEMERY SAVINGS & LOAN BANK, INC.	Thrift Bank	0.00
LIFE SAVINGS BANK INC	Thrift Bank	0.00
MALASIQUI PROGRESSIVE SLB, INC	Thrift Bank	0.00
MALAYAN BANK SAVINGS AND MORT BANK INC	Thrift Bank	0.00
MARITIME SAVINGS BANK CORPORATION	Thrift Bank	0.00
MAXIMUM SAVINGS BANK	Thrift Bank	0.00
METRO CEBU PUBLIC SAVINGS BANK	Thrift Bank	0.00
NORTHPOINT DEV'T BANK INC	Thrift Bank	0.00
PACIFIC ACE SAVINGS BANK INC	Thrift Bank	0.00
PAMPANGA DEVELOPMENT BANK	Thrift Bank	0.00
PENBANK INC (A PDB) (FORMERLY: PENINSULA RB INC)	Thrift Bank	0.00
PHIL STAR DEVELOPMENT BANK INC	Thrift Bank	0.00
PHILIPPINE BUSINESS BANK INC A SAVINGS BANK	Thrift Bank	0.00
PHILIPPINE RESOURCES SAVINGS BANKING CORPORATION (PR SAVINGS	Thrift Bank	0.00
PRODUCERS SAVINGS BANK CORPORATION	Thrift Bank	0.00
QUEEN CITY DEVELOPMENT BANK INC OR QUEENBANK A THRIFT BANK	Thrift Bank	0.00
QUEZON COCONUT BANK INC (A THRIFT BANK)	Thrift Bank	0.00
STERLING BANK OF ASIA INC (A SAVINGS BANK)	Thrift Bank	0.00
SUN SAVINGS BANK INC	Thrift Bank	0.00
UNITED COCONUT PLANTERS BANK	U/KB	0.00
UNITED OVERSEAS BANK LIMITED MANILA BRANCH	U/KB	0.00
UNIVERSITY SAVINGS BANK INC	Thrift Bank	0.00
WEALTH DEVELOPMENT BANK CORPORATION	Thrift Bank	0.00
YUANTA SAVINGS BANK PHILIPPINES INC	Thrift Bank	0.00
PHILIPPINE VETERANS BANK	U/KB	6.31
LAND BANK OF THE  PHILIPPINES	U/KB	10.61
CHINA BANK SAVINGS INC	Thrift Bank	10.66
RIZAL COMM'L BANKING CORP	U/KB	10.81
PHIL SAVINGS BANK	Thrift Bank	10.97
EAST WEST BANKING CORP	U/KB	11.01
UNION BANK OF THE PHILS	U/KB	11.23
DEVELOPMENT BANK OF THE PHIL	U/KB	11.37
MUFG BANK INC	U/KB	11.39
PHIL NATIONAL BANK	U/KB	11.42
ASIA UNITED BANK CORPORATION	U/KB	11.53
BDO UNIBANK INC	U/KB	11.86
MAYBANK PHILIPPINES INC	U/KB	11.98
PHIL BANK OF COMMUNICATIONS	U/KB	12.25
RCBC SAVINGS BANK INC	Thrift Bank	12.65
MIZUHO BANK LTD - MANILA BRANCH	U/KB	12.73
CHINA BANKING CORP	U/KB	12.76
UCPB SAVINGS BANK	Thrift Bank	13.39
METROPOLITAN BANK & TRUST CO	U/KB	14.63
CITIBANK, N.A.	U/KB	15.32
SECURITY BANK CORP	U/KB	15.53
BANK OF THE PHIL ISLANDS	U/KB	15.65
KEB HANA BANK - MANILA BRANCH	U/KB	15.94
BPI FAMILY SAVINGS BANK INC	Thrift Bank	16.21
ROBINSONS BANK CORPORATION	U/KB	16.41
STANDARD CHARTERED BANK	U/KB	16.58
CTBC BANK (PHILIPPINES) CORP	U/KB	16.79
BDO PRIVATE BANK, INC.	U/KB	16.99
BANK OF COMMERCE	U/KB	17.11
HONGKONG & SHANGHAI BANKING CORP	U/KB	18.89
MEGA INT'L COMM'L BANK CO LTD	U/KB	20.22
BPI DIRECT BANKO INC	Thrift Bank	20.57
PNB SAVINGS BANK	Thrift Bank	21.39
ANZ BANKING GROUP LTD	U/KB	22.27
JP MORGAN CHASE BANK NATIONAL ASSN.	U/KB	31.45
PHIL TRUST COMPANY	U/KB	31.73
LEGAZPI SAVINGS BANK INC	Thrift Bank	32.14
HSBC SAVINGS BANK PHILIPPINES	Thrift Bank	32.91
BANGKOK BANK PUBLIC CO LTD	U/KB	36.76
MERCHANTS SAVINGS & LOAN ASSN INC	Thrift Bank	39.16
SHINHAN BANK - MANILA BRANCH	U/KB	46.21
ING BANK N.V.	U/KB	49.04
AL-AMANAH ISLAMIC INVESTMENT BANK OF THE PHILS	U/KB	55.91
SUMITOMO MITSUI BANKING CORPORATION - MANILA BRANCH	U/KB	56.99
INDUSTRIAL BANK OF KOREA MANILA BRANCH	U/KB	83.20
FIRST COMMERCIAL BANK	U/KB	194.75
CATHAY UNITED BANK CO LTD - MANILA BRANCH	U/KB	333.91
HUA NAN COMMERCIAL BANK LTD MANILA BRANCH	U/KB	371.60
CITY SAVINGS BANK INC	Thrift Bank	NA
DEUTSCHE BANK AG	U/KB	NA
LUZON DEVELOPMENT BANK	Thrift Bank	NA
OVERSEAS FILIPINO BANK	Thrift Bank	NA
THE PALAWAN BANK (PALAWAN DB) INC	Thrift Bank	NA

Philippine Commercial Banks Show Improvement at Year End 2011

Editor's Note:  This blog was inspired by the spectacular failure of Banco Filipino Savings and Mortgage Bank for the second time in its 38 years of existence.  This blog post and other blog posts like it attempt to describe why the bank failed.  But it also attempts to assess what other Philippine Banks have the potential to fail in the not too distant future. To see blog posts on other banks, click on the Banco Filipino Graphic at the top of the blog or click on the blog archive on the right hand column, or simply go to bancofilipinofailure.blogspot.com.

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:  http://www.gmanetwork.com/news/video/93600/saksi-pagsasara-ng-banco-filipino-at-lbc-devt-bank-ikinadismaya.  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 Commercial Banking Industry (from www.bsp.gov.ph), Total Distressed Assets of Philippine Thrift Banks decreased by PHP 8.1 billion or 1.46% from September 30, 2011 to December 31, 2011.  Total Capital Cushion of Philippine Commercial Banks increased by 3.65% during the same period.  As a result, the Commercial Bank's Ratio of Total Distressed Assets to Total Capital Cushion decreased by 4.93%, from 83.19% as of September 30, 2011 to 79.09% as of December 31, 2011.  The results are skewed slightly lower by the absence of Export and Industry Bank, which, as of September 30, 2011, was ranked the most insolvent bank.  See previous blog posts: "Export and Industry Bank Becomes Even More Insolvent! - September 30, 2011" and "Time is Running Out for Export and Industry Bank".  Export and Industry Bank did not have a Published Statement of Condition on www.bsp.gov.ph as of the date of this blog post.

Those banks that posted significant improvements in this ratio include:

1. Internationale Nederlanden Groep BK (36.28% decrease)
2. BDO Private Bank, Inc. (29.85% decrease)
3. Maybank Philippines Inc. (25.23% decrease)
4. HongKong and Shanghai Banking Corporation (22.82% decrease)
5. Union Bank of the Philippines (15.31% decrease)

The banks that exhibited significant deterioration in this ratio include:

1. Asia United Bank Corporation (32.21% increase)
2. East West Banking Corporation (27.38% increase)

Distressed Banks

None of the banks with significant increases have been classified as distressed based on their ratio of Total Distressed Assets to Total Capital Cushion as of the 4th Qtr. 2011.

United Coconut Planters Bank continues to rank as the most distressed commercial bank in the country.  Its Total Distressed Assets are more than ten times in Total Capital Cushion, Three of the banks ranked as distressed in the 4th Qtr. of 2011 showed a deterioration in their distressed ratios.  These are:

1. United Coconut Planters Bank (6.30% increase)
2. Philippine Bank of Communications (5.18% increase)
3. Philippine Veterans Bank (3.13% increase)

Two of the banks classified as distressed in the 4th Qtr. of 2011 showed a decline in their distressed ratios.  These are:

1. Philippine National Bank (13.50% decrease)
2. Bank of Commerce (8.92% decrease)

A third, Union Bank of the Philippines, which was classified as just barely distressed in the 3rd Qtr. of 2011 (with a distressed ratio of 100.73%), dropped out of the distressed list with a ratio of 85.31% in the 4th Qtr. of 2011.

All the banks that were flagged as borderline insolvent (highlighted in yellow) as of September 30, 2011, with the exception of the Union Bank of the Philippines, remain borderline insolvent as of December 31, 2011.  However, as a group the distressed banks showed some improvement in their Total Distressed Assets/Total Capital Cushion Ratios.  This ratio now stands at 218.34% as of December 31, 2011, down from 236.86% as of September 30, 2011.

Philippine Commercial Banking System
Total Distressed Assets/ Total Capital Cushion
September 30, 2011 to December 31, 2011
In PHP
Name of Bank	September 30, 2011	December 31, 2011	Variance	% Variance
Asia United Bank Corporation	47.00%	62.14%	15.14%	32.21%
East West Banking Corporation	53.66%	68.36%	14.69%	27.38%
Chinatrust (Philippines) Commercial Banking Corporation	16.63%	18.43%	1.81%	10.88%
Development Bank of the Philippines	46.15%	49.44%	3.29%	7.14%
United Coconut Planters Bank	944.09%	1003.58%	59.49%	6.30%
Philippine Bank of Communications	152.23%	160.10%	7.88%	5.18%
Bank of the Philippine Islands	61.77%	63.71%	1.94%	3.15%
Philippine Veterans Bank	189.62%	195.56%	5.94%	3.13%
Robinsons Bank Corporation	22.45%	22.46%	0.01%	0.05%
Philippine Trust Company	55.66%	55.45%	-0.21%	-0.38%
Al-Amanah Islamic Bank of the Philippines	15.69%	15.47%	-0.22%	-1.41%
Security Bank Corporation	48.03%	47.14%	-0.89%	-1.86%
China Banking Corporation	58.51%	57.42%	-1.09%	-1.87%
Banco De Oro Unibank	61.04%	59.90%	-1.14%	-1.87%
Allied Banking Corporation	72.98%	71.45%	-1.53%	-2.10%
Bank of Commerce	178.08%	162.20%	-15.88%	-8.92%
Land Bank of the Philippines	72.55%	65.30%	-7.25%	-9.99%
Metropolitan Bank & Trust Company	71.43%	62.99%	-8.44%	-11.81%
Rizal Commercial Banking Corporation	74.01%	64.70%	-9.31%	-12.58%
Philippine National Bank	170.82%	147.76%	-23.06%	-13.50%
Union Bank of the Philippines	100.73%	85.31%	-15.42%	-15.31%
HongKong & Shanghai Banking Corporation	92.97%	71.76%	-21.21%	-22.82%
Maybank Philippines Inc.	69.08%	51.65%	-17.43%	-25.23%
BDO Private Bank, Inc.	3.55%	2.49%	-1.06%	-29.85%
Internationale Nederlanden Groep BK	17.81%	11.35%	-6.46%	-36.28%
Grand Total	83.19%	79.09%	-4.10%	-4.93%

Philippine Commercial Banking System
Total Distressed Assets/ Total Capital Cushion
September 30, 2011 to December 31, 2011
In PHP
		September 30, 2011				December 31, 2011				Variance
Bank	Total Distressed Assets (In PHP)	Total Capital Cushion (In PHP)	Distressed Assets/ Total Capital Cushion (In %)		Total Distressed Assets (In PHP)	Total Capital Cushion (In PHP)	Distressed Assets/ Total Capital Cushion (In %)		Total Distressed Assets (In PHP)	Total Capital Cushion (In PHP)	Distressed Assets/ Total Capital Cushion (In %)
United Coconut Planters Bank	58,433,954,233.82	6,189,438,043.36	944.09%		58,210,111,052.92	5,800,229,638.98	1003.58%		-223,843,180.90	-389,208,404.38	59.49%
Philippine Veterans Bank	10,879,880,413.60	5,737,758,181.67	189.62%		11,261,881,811.07	5,758,728,657.92	195.56%		382,001,397.47	20,970,476.25	5.94%
Bank of Commerce	32,699,114,872.49	18,361,861,626.49	178.08%		32,929,553,535.88	20,301,508,621.47	162.20%		230,438,663.39	1,939,646,994.98	-15.88%
Philippine Bank of Communications	9,291,519,325.92	6,103,760,074.12	152.23%		9,471,188,959.63	5,915,638,902.18	160.10%		179,669,633.71	-188,121,171.94	7.88%
Philippine National Bank	64,949,186,122.23	38,021,318,336.45	170.82%		61,539,362,228.07	41,647,300,624.97	147.76%		-3,409,823,894.16	3,625,982,288.52	-23.06%
Union Bank of the Philippines	38,582,465,913.28	38,301,194,129.33	100.73%		38,822,563,049.10	45,506,545,040.66	85.31%		240,097,135.82	7,205,350,911.33	-15.42%
HongKong & Shanghai Banking Corporation	5,182,943,886.09	5,574,647,606.25	92.97%		3,990,058,443.49	5,560,159,799.26	71.76%		-1,192,885,442.60	-14,487,806.99	-21.21%
Allied Banking Corporation	13,724,401,446.84	18,805,704,450.28	72.98%		13,475,330,400.74	18,859,833,076.12	71.45%		-249,071,046.10	54,128,625.84	-1.53%
East West Banking Corporation	6,350,758,139.69	11,834,102,039.71	53.66%		7,972,097,612.88	11,662,142,632.92	68.36%		1,621,339,473.19	-171,959,406.79	14.69%
Land Bank of the Philippines	36,986,132,132.78	50,983,030,868.93	72.55%		33,266,907,399.89	50,944,842,479.97	65.30%		-3,719,224,732.89	-38,188,388.96	-7.25%
Rizal Commercial Banking Corporation	27,086,579,563.52	36,598,227,573.49	74.01%		24,131,710,175.80	37,298,479,029.45	64.70%		-2,954,869,387.72	700,251,455.96	-9.31%
Bank of the Philippine Islands	50,690,573,945.83	82,069,124,131.12	61.77%		50,047,779,686.11	78,556,544,290.98	63.71%		-642,794,259.72	-3,512,579,840.14	1.94%
Metropolitan Bank & Trust Company	63,938,649,304.53	89,510,341,778.10	71.43%		63,787,741,208.04	101,261,532,842.48	62.99%		-150,908,096.49	11,751,191,064.38	-8.44%
Asia United Bank Corporation	4,493,923,413.49	9,561,720,005.85	47.00%		5,941,452,139.74	9,561,736,538.00	62.14%		1,447,528,726.25	16,532.15	15.14%
Banco De Oro Unibank	67,521,482,859.14	110,621,563,730.79	61.04%		65,154,415,706.61	108,776,275,232.51	59.90%		-2,367,067,152.53	-1,845,288,498.28	-1.14%
China Banking Corporation	21,369,318,244.66	36,522,588,097.69	58.51%		23,774,532,770.51	41,406,720,599.32	57.42%		2,405,214,525.85	4,884,132,501.63	-1.09%
Philippine Trust Company	8,185,195,998.45	14,706,678,620.05	55.66%		8,112,568,190.46	14,631,348,671.35	55.45%		-72,627,807.99	-75,329,948.70	-0.21%
Maybank Philippines Inc.	2,736,360,904.56	3,961,339,978.25	69.08%		2,847,143,306.74	5,512,890,428.32	51.65%		110,782,402.18	1,551,550,450.07	-17.43%
Development Bank of the Philippines	16,528,998,918.41	35,817,588,465.99	46.15%		17,694,996,122.18	35,788,905,692.76	49.44%		1,165,997,203.77	-28,682,773.23	3.29%
Security Bank Corporation	12,831,498,874.37	26,715,472,886.65	48.03%		12,289,009,897.96	26,070,438,913.08	47.14%		-542,488,976.41	-645,033,973.57	-0.89%
Robinsons Bank Corporation	1,164,334,016.52	5,186,142,534.87	22.45%		1,173,989,648.85	5,226,473,730.40	22.46%		9,655,632.33	40,331,195.53	0.01%
Chinatrust (Philippines) Commercial Banking Corporation	1,082,554,081.24	6,511,597,089.04	16.63%		1,112,691,065.96	6,036,104,571.35	18.43%		30,136,984.72	-475,492,517.69	1.81%
Al-Amanah Islamic Bank of the Philippines	83,467,825.43	532,017,355.74	15.69%		82,421,466.30	532,866,747.85	15.47%		-1,046,359.13	849,392.11	-0.22%
Internationale Nederlanden Groep BK	971,653,400.08	5,454,949,434.17	17.81%		623,286,587.93	5,491,404,385.19	11.35%		-348,366,812.15	36,454,951.02	-6.46%
BDO Private Bank, Inc.	161,347,789.04	4,538,697,736.16	3.55%		113,090,563.50	4,534,582,971.11	2.49%		-48,257,225.54	-4,114,765.05	-1.06%
Grand Total	555,926,295,626.01	668,220,864,774.55	83.19%		547,825,883,030.36	692,643,234,118.60	79.09%		-8,100,412,595.65	24,422,369,344.05	-4.10%

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 September 30, 2011 and December 31, 2011 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.