Overstated Capital of Philippine Banks as of December 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, four banks have Deferred Charges as of December 31, 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 33.00% of its Stockholder's Equity.
 
Retained Earnings
 
Three banks on the list have sufficient Retained Earnings (RE) to absorb their unbooked losses as of December 31, 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

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

Overstated Capital of Philippine Banks as of June 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 June 30, 2019. Fortunately, not one bank has deferred charges large enough to adversely impact its Stockholder's Equity (SE).

 

Retained Earnings

All banks on the list have sufficient Retained Earnings (RE) to absorb their unbooked losses as of June 30, 2019.

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)

Overstated Capital of Philippine Banks as of December 31, 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 8 banks as of April 1, 2019. 
  
Editor's Note: According to the BSP website, www.bsp.gov.ph, a record 8 banks do not have Published Statements of Condition for the quarter ended on December 31, 2018. This comprises 8% of the 101 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. On September 30, 2018, that number grew to 9. As of December 31, 2018, that number decreased by 1, to 8.
 
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."

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
December 31, 2018
Bank	Type of Bank	Published Statement of Condition
BATAAN SAVINGS AND LOAN BANK	Thrift Bank	NA
CITY SAVINGS BANK INC	Thrift Bank	NA
MALASIQUI PROGRESSIVE SLB, INC	Thrift Bank	NA
MAXIMUM SAVINGS BANK	Thrift Bank	NA
OVERSEAS FILIPINO BANK	Thrift Bank	NA
PHILIPPINE VETERANS BANK	U/KB	NA
THE PALAWAN BANK (PALAWAN DB) INC	Thrift Bank	NA
UNITED COCONUT PLANTERS BANK	U/KB	NA

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.









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, only one bank has Deferred Charges as of December 31, 2018:

1. Wealth Development Bank Corporation (Deferred Charges of 0.06% of SE)

Retained Earnings

Wealth Development Bank Corporation has sufficient Retained Earnings (RE) to absorb their unbooked losses as of December 31, 2018

1. Wealth Development Bank Corporation (1.09% of RE)