Philippine Thrift Banks Continue to Improve in the First Quarter of 2012

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.  A bank that has a Distressed Ratio greater than 100% is flagged as borderline insolvent (highlighted in yellow).  For a more detailed discussion of this ratio, please visit a previous blog post: The Texas Ratio of Select Philippine Banks 

Distressed Banks:

The list of distressed thrift banks are as follows:

1. Real Bank (A Thrift Bank) Inc. (Distressed Ratio of 1125.30%)
2. Village SLA, Inc. (Distressed Ratio of 709.55%)
3. GSIS Family Bank (Distressed Ratio of 477.72%)
4. Legazpi Savings Bank Inc. (Distressed Ratio of 417.83%)
5. Iloilo City Development Bank (Distressed Ratio of 391.87%)
6. Planters Development Bank (Distressed Ratio of 258.50%)
7. Bataan Development Bank (Distressed Ratio of 234.00%)
8. Business & Consumers Bank (Distressed Ratio of 209.76%)
9. Philippine Resources Savings Banking Corporation (Distressed Ratio of 207.83%)
10. Farmers Savings & Loan Bank (Distressed Ratio of 179.10%)
11. RCBC Savings Bank (Distressed Ratio of 206.28%)
12. Opportunity Microfinance Bank (Distressed Ratio of 172.96%)
13. Equicom SB (Distressed Ratio of 158.65%)
14. Hiyas Savings & Loan Bank (Distressed Ratio of 143,55%)
15. China Bank Savings (Distressed Ratio of 142.52%)
16. University Savings Bank (Distressed Ratio of 138.80%)
17. Malayan Bank Savings & Mortgage Bank (Distressed Ratio of 130.88%)
18. Luzon Development Bank (Distressed Ratio of 124.05%)
19. Dumaguete City Development Bank (Distressed Ratio of 122.29%)
20. Philippine Postal Savings Bank (Distressed Ratio of 105.28%)

It should be noted that two banks dropped out of the borderline insolvent list (highlighted in yellow):

1. Citibank Savings Inc., which had a distressed ratio of 113.30% as of December 31, 2011, decreased its distressed assets by PhP 174.5 million while increasing its capital cushion by PhP 697.4 million in the first quarter of 2012.  This resulted in a 18.93% improvement in its overall distressed ratio from 113.30% as of December 31, 2011 to only 91.85% as of March 31, 2012.
2. Premiere Development Bank's increase in capital cushion by PhP 471 million offset the increase in its distressed assets (PhP 69.5 million) during the first quarter of 2012.  As a result, its distressed ratio dropped from 129.41% as of December 31, 2011 to only 91.58% as of March 31, 2012 - a 29.23% improvement in its distressed ratios.

It should also be noted that two banks entered the borderline insolvent list:

1. Philippine Postal Savings Bank dropped out of the list in the fourth quarter of 2011, only to reenter it in the first quarter of 2012 with a 37.48% deterioration in its distressed ratios from 76.58% as of December 31, 2011 to 105.28% as of March 31, 2012.  The increase was primarily due to the PhP 240.5 million jump in distressed assets during the first quarter of 2012.
2. Philippine Resource Savings Banking Corporation is new to the list and a new entrant to the list of Phiippine Thrift Banks.  It's distressed ratio stood at 207.83% as of March 31, 2012.

It should also be noted that City Savings Bank, which was the second most insolvent Philippine Thrift Bank as of year end 2011, did not have a published statement of condition as of March 31, 2012.

Overall Condition

Based on the individual Published Statements of Condition for the Philippine Thrift Banking Industry (from www.bsp.gov.ph), Total Distressed Assets of Philippine Thrift Banks decreased by PhP 8.672 billion or 8.82% from December 31, 2011 to March 31, 2012.  Total Capital Cushion of Philippine Thrift Banks increased by PhP 911.337 billion or 15.19% during the same period.  As a result, the Thrift Bank's Ratio of Total Distressed Assets to Total Capital Cushion decreased by 20.84%, from 131.78% as of December 31, 2011 to 104.32% as of March 31, 2012.

The banks that posted as significant improvement in their distressed ratios include:

1. HSBC Savings Bank (Phils) Inc. (44.37% decrease)
2. Progress SLA (44.34% decrease)
3. Optimum Development Bank (41.84% decrease)
4. Premiere Development Bank (29.23% decrease)
5. Microfinance Maximum SB (27.92 decrease)
6. China Bank Savings (26.03% decrease)
7. Card SME Bank (25.87% decrease)
8. Philippine Savings Bank (22.85% decrease)
9. Pacific Ace Savings Bank (22.78% decrease)
10. BPI Family Savings Bank (21.28% decrease)

The banks that exhibited a significant deterioration in their distressed ratio include:

1. Merchants Savings & Loan Association Inc. (539.68% increase)
2. BPI Globe Bangko Inc. Savings Bank (151.08% increase)
3. CityState Savings Bank (50.36% increase)
4. Allied Savings Bank (39.01% increase)
5. Philippine Postal Savings Bank (37.48% increase)
6. Dungganon Bank (31.41% increase)
7. Real Bank (A Thrift Bank) Inc. (23.95 increase)

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 December 31, 2011 and March 31, 2012 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.

Philippine Thrift Banking System
Total Distressed Assets/ Total Capital Cushion
December 31, 2011 to March 31, 2012
Bank	12/31/11	03/31/12	Variance	% Variance
Merchants Savings & Loan Association Inc.	1.69%	10.80%	9.11%	539.68%
BPI Globe Banko Inc. Savings Bank	8.78%	22.05%	13.27%	151.08%
CityState Savings Bank	22.75%	34.20%	11.45%	50.36%
Allied Savings Bank	29.74%	41.34%	11.60%	39.01%
Philippine Postal Savings Bank	76.58%	105.28%	28.70%	37.48%
Dungganon Bank	10.19%	13.38%	3.20%	31.41%
Real Bank (A Thrift Bank) Inc.	907.88%	1125.30%	217.42%	23.95%
Opportunity Microfinance Bank	155.56%	172.38%	16.82%	10.81%
Bataan SLA	11.92%	13.16%	1.24%	10.42%
Life Savings Bank	54.99%	59.35%	4.36%	7.93%
Quezon Coconut Producers SLB Inc.	46.57%	49.96%	3.39%	7.28%
Penbank, Inc.	79.98%	84.67%	4.69%	5.87%
BPI Direct Savings Bank	21.65%	22.89%	1.24%	5.73%
GSIS Family Bank	452.17%	477.72%	25.55%	5.65%
Isla Bank (A Thrift Bank) Inc.	8.23%	8.67%	0.44%	5.37%
Malayan Bank Savings & Mortgage Bank	125.56%	130.88%	5.32%	4.24%
Planters Development Bank	248.91%	258.50%	9.58%	3.85%
Business & Consumers Bank	204.37%	209.76%	5.39%	2.64%
Century Savings Bank	4.80%	4.91%	0.11%	2.23%
Maritime SLA	31.98%	32.60%	0.62%	1.93%
Luzon Development Bank	121.92%	124.05%	2.13%	1.75%
Lemery Savings & Loan Bank, Inc.	47.11%	47.58%	0.48%	1.01%
World Partners Bank (A Thrift Bank)	63.32%	63.94%	0.63%	0.99%
Pridestar Development Bank	59.03%	59.39%	0.35%	0.60%
Tong Yang Savings Bank Inc.	65.94%	66.07%	0.12%	0.19%
UCPB Savings Bank	46.79%	46.75%	-0.05%	-0.10%
The Queen City Development Bank	21.58%	21.56%	-0.02%	-0.11%
Dumaguete City Development Bank	122.90%	122.29%	-0.61%	-0.50%
Bataan Development Bank	236.64%	234.00%	-2.64%	-1.12%
Village SLA, Inc.	720.61%	709.55%	-11.06%	-1.54%
Sampaguita SLA	52.63%	51.39%	-1.24%	-2.36%
BDO Elite Savings Bank	6.35%	6.19%	-0.16%	-2.50%
Sun Savings Bank	8.38%	8.14%	-0.24%	-2.84%
United Overseas Bank Philippines	66.55%	64.49%	-2.06%	-3.09%
Pampanga Development Bank	68.24%	65.89%	-2.35%	-3.44%
Wealth Bank - A Development Bank	82.40%	79.38%	-3.02%	-3.66%
Cordillera Savings Bank	59.17%	56.67%	-2.50%	-4.23%
First Consolidated Bank	59.25%	56.04%	-3.21%	-5.42%
Farmers Savings & Loan Bank	190.61%	179.10%	-11.51%	-6.04%
Sterling Bank of Asia Inc.	77.60%	72.79%	-4.81%	-6.20%
Hiyas Savings & Loan Bank	153.26%	143.55%	-9.71%	-6.34%
Equicom SB	171.10%	158.65%	-12.45%	-7.28%
Metro Cebu Public Savings Bank	81.78%	73.28%	-8.50%	-10.39%
Producers Savings Bank	99.46%	88.89%	-10.56%	-10.62%
Malasiqui Progressive SLB, Inc.	41.12%	35.94%	-5.18%	-12.61%
Philippine Business Bank	80.93%	70.09%	-10.84%	-13.39%
Legazpi Savings Bank Inc.	482.76%	417.83%	-64.93%	-13.45%
University Savings Bank	161.00%	138.80%	-22.20%	-13.79%
RCBC Savings Bank	206.28%	172.96%	-33.32%	-16.15%
Tower Development Bank	62.04%	51.55%	-10.50%	-16.92%
Iloilo City Development Bank	475.13%	391.87%	-83.26%	-17.52%
Northpoint Development Bank	62.93%	51.53%	-11.39%	-18.11%
Citibank Savings Inc.	113.30%	91.85%	-21.44%	-18.93%
Liberty Savings Bank	73.40%	58.90%	-14.50%	-19.76%
BPI Family Savings Bank	90.32%	71.09%	-19.22%	-21.28%
Pacific Ace Savings Bank	20.19%	15.59%	-4.60%	-22.78%
Philippine Savings Bank	105.18%	81.15%	-24.03%	-22.85%
Card SME Bank Inc. (A Thrift Bank)	31.86%	23.62%	-8.24%	-25.87%
China Bank Savings	192.68%	142.52%	-50.15%	-26.03%
Microfinance Maximum SB (Maxbank)	64.53%	46.51%	-18.02%	-27.92%
Premiere Development Bank	129.41%	91.58%	-37.82%	-29.23%
Optimum Development Bank	27.60%	16.05%	-11.55%	-41.84%
Progress SLA	14.23%	7.92%	-6.31%	-44.34%
HSBC Savings Bank (Phils) Inc.	17.10%	9.51%	-7.59%	-44.37%
Bank One Savings and Trust Corp.	NA	10.83%	NA	NA
City Savings Bank	776.02%	NA	NA	NA
Philippine Resources Savings Banking Corporation	NA	207.83%	NA	NA
Average	131.78%	104.32%	-27.46%	-20.84%

Source: www.bsp.gov.ph Philippine Thrift Banking System
Total Distressed Assets/ Total Capital Cushion
December 31, 2011 to March 31, 2012
		December 31, 2011				March 31, 2012				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 %)
Real Bank (A Thrift Bank) Inc.	9,485,964,146.12	1,044,846,977.77	907.88%		9,290,372,249.91	825,587,293.41	1125.30%		-195,591,896.21	-219,259,684.36	217.42%
Village SLA, Inc.	600,181,101.60	83,288,037.75	720.61%		612,655,357.33	86,344,754.81	709.55%		12,474,255.73	3,056,717.06	-11.06%
GSIS Family Bank	2,204,761,117.36	487,593,604.82	452.17%		2,216,709,927.78	464,020,110.73	477.72%		11,948,810.42	-23,573,494.09	25.55%
Legazpi Savings Bank Inc.	823,599,656.19	170,602,061.13	482.76%		788,905,245.31	188,812,023.99	417.83%		-34,694,410.88	18,209,962.86	-64.93%
Iloilo City Development Bank	287,326,192.05	60,472,657.10	475.13%		255,784,329.12	65,272,215.10	391.87%		-31,541,862.93	4,799,558.00	-83.26%
Planters Development Bank	10,936,549,252.26	4,393,722,453.79	248.91%		11,509,763,345.38	4,452,573,423.58	258.50%		573,214,093.12	58,850,969.79	9.58%
Bataan Development Bank	175,335,975.57	74,095,120.90	236.64%		179,150,197.61	76,561,456.79	234.00%		3,814,222.04	2,466,335.89	-2.64%
Business & Consumers Bank	160,491,202.74	78,531,520.78	204.37%		169,610,770.04	80,860,999.25	209.76%		9,119,567.30	2,329,478.47	5.39%
Philippine Resources Savings Banking Corporation					2,520,580,635.97	1,212,811,159.39	207.83%		2,520,580,635.97	1,212,811,159.39	207.83%
Farmers Savings & Loan Bank	222,707,597.45	116,837,900.36	190.61%		214,021,290.23	119,495,878.00	179.10%		-8,686,307.22	2,657,977.64	-11.51%
RCBC Savings Bank	13,658,977,955.49	6,621,590,303.77	206.28%		13,598,190,601.18	7,861,976,886.63	172.96%		-60,787,354.31	1,240,386,582.86	-33.32%
Opportunity Microfinance Bank	213,959,344.39	137,541,004.61	155.56%		242,994,816.88	140,966,660.91	172.38%		29,035,472.49	3,425,656.30	16.82%
Equicom SB	808,587,759.96	472,581,826.89	171.10%		801,463,255.03	505,169,694.78	158.65%		-7,124,504.93	32,587,867.89	-12.45%
Hiyas Savings & Loan Bank	252,118,703.13	164,502,210.42	153.26%		236,466,976.10	164,731,409.03	143.55%		-15,651,727.03	229,198.61	-9.71%
China Bank Savings	1,584,223,044.88	822,218,155.26	192.68%		1,672,743,819.51	1,173,665,055.26	142.52%		88,520,774.63	351,446,900.00	-50.15%
University Savings Bank	336,071,927.21	208,738,927.20	161.00%		316,376,243.80	227,936,477.06	138.80%		-19,695,683.41	19,197,549.86	-22.20%
Malayan Bank Savings & Mortgage Bank	1,350,230,409.26	1,075,379,215.58	125.56%		1,407,474,426.81	1,075,379,215.98	130.88%		57,244,017.55	0.40	5.32%
Luzon Development Bank	532,693,730.92	436,917,967.42	121.92%		550,869,696.74	444,071,923.87	124.05%		18,175,965.82	7,153,956.45	2.13%
Dumaguete City Development Bank	250,453,271.44	203,793,878.67	122.90%		252,146,106.06	206,193,126.17	122.29%		1,692,834.62	2,399,247.50	-0.61%
Philippine Postal Savings Bank	621,326,704.16	811,348,052.94	76.58%		861,789,478.39	818,586,509.18	105.28%		240,462,774.23	7,238,456.24	28.70%
Citibank Savings Inc.	4,306,662,719.49	3,801,262,095.38	113.30%		4,132,188,920.79	4,498,629,545.94	91.85%		-174,473,798.70	697,367,450.56	-21.44%
Premiere Development Bank	1,238,115,801.58	956,754,306.80	129.41%		1,307,625,402.15	1,427,802,395.52	91.58%		69,509,600.57	471,048,088.72	-37.82%
Producers Savings Bank	524,647,770.68	527,512,390.32	99.46%		571,001,212.84	642,350,700.67	88.89%		46,353,442.16	114,838,310.35	-10.56%
Penbank, Inc.	203,776,641.17	254,791,038.35	79.98%		215,732,452.02	254,791,038.35	84.67%		11,955,810.85	0.00	4.69%
Philippine Savings Bank	14,651,257,542.20	13,929,160,698.54	105.18%		13,601,325,210.06	16,759,739,786.84	81.15%		-1,049,932,332.14	2,830,579,088.30	-24.03%
Wealth Bank - A Development Bank	325,647,054.51	395,185,869.59	82.40%		320,723,480.31	404,016,447.07	79.38%		-4,923,574.20	8,830,577.48	-3.02%
Metro Cebu Public Savings Bank	60,688,042.71	74,212,433.16	81.78%		60,428,625.04	82,461,425.57	73.28%		-259,417.67	8,248,992.41	-8.50%
Sterling Bank of Asia Inc.	1,322,961,691.54	1,704,899,830.40	77.60%		1,340,490,929.25	1,841,699,407.90	72.79%		17,529,237.71	136,799,577.50	-4.81%
BPI Family Savings Bank	12,610,665,029.99	13,962,882,381.92	90.32%		12,108,718,892.33	17,032,382,062.40	71.09%		-501,946,137.66	3,069,499,680.48	-19.22%
Philippine Business Bank	2,245,124,379.02	2,774,250,378.64	80.93%		2,468,927,091.97	3,522,480,360.07	70.09%		223,802,712.95	748,229,981.43	-10.84%
Tong Yang Savings Bank Inc.	292,428,936.38	443,455,225.55	65.94%		294,036,660.28	445,066,651.62	66.07%		1,607,723.90	1,611,426.07	0.12%
Pampanga Development Bank	82,116,804.28	120,343,323.41	68.24%		83,151,645.70	126,202,725.13	65.89%		1,034,841.42	5,859,401.72	-2.35%
United Overseas Bank Philippines	988,810,901.35	1,485,808,841.71	66.55%		933,928,979.82	1,448,098,996.81	64.49%		-54,881,921.53	-37,709,844.90	-2.06%
World Partners Bank (A Thrift Bank)	110,271,753.07	174,159,550.30	63.32%		109,319,030.79	170,966,160.68	63.94%		-952,722.28	-3,193,389.62	0.63%
Pridestar Development Bank	42,604,026.52	72,170,956.24	59.03%		42,219,537.59	71,093,548.88	59.39%		-384,488.93	-1,077,407.36	0.35%
Life Savings Bank	34,997,589.10	63,645,807.09	54.99%		39,251,089.09	66,138,275.39	59.35%		4,253,499.99	2,492,468.30	4.36%
Liberty Savings Bank	43,839,885.29	59,726,549.24	73.40%		37,518,711.95	63,701,027.16	58.90%		-6,321,173.34	3,974,477.92	-14.50%
Cordillera Savings Bank	73,228,594.72	123,766,715.93	59.17%		70,184,283.70	123,858,192.76	56.67%		-3,044,311.02	91,476.83	-2.50%
First Consolidated Bank	991,754,217.92	1,673,870,535.21	59.25%		1,040,606,604.46	1,856,880,353.48	56.04%		48,852,386.54	183,009,818.27	-3.21%
Tower Development Bank	69,910,740.60	112,678,828.58	62.04%		58,084,767.24	112,678,828.58	51.55%		-11,825,973.36	0.00	-10.50%
Northpoint Development Bank	37,247,922.10	59,193,177.23	62.93%		28,911,591.89	56,103,745.64	51.53%		-8,336,330.21	-3,089,431.59	-11.39%
Sampaguita SLA	36,391,748.93	69,148,222.58	52.63%		37,761,063.58	73,481,194.82	51.39%		1,369,314.65	4,332,972.24	-1.24%
Quezon Coconut Producers SLB Inc.	26,669,937.24	57,268,623.22	46.57%		28,611,592.80	57,268,623.22	49.96%		1,941,655.56	0.00	3.39%
Lemery Savings & Loan Bank, Inc.	34,803,555.75	73,882,141.35	47.11%		33,750,897.82	70,929,116.35	47.58%		-1,052,657.93	-2,953,025.00	0.48%
UCPB Savings Bank	1,032,980,696.92	2,207,463,095.83	46.79%		1,030,048,650.10	2,203,418,599.36	46.75%		-2,932,046.82	-4,044,496.47	-0.05%
Microfinance Maximum SB (Maxbank)	39,506,859.85	61,222,373.26	64.53%		28,970,906.57	62,286,572.17	46.51%		-10,535,953.28	1,064,198.91	-18.02%
Allied Savings Bank	301,699,489.80	1,014,585,418.07	29.74%		417,741,191.77	1,010,574,472.46	41.34%		116,041,701.97	-4,010,945.61	11.60%
Malasiqui Progressive SLB, Inc.	22,545,447.81	54,828,649.13	41.12%		19,781,785.50	55,048,215.23	35.94%		-2,763,662.31	219,566.10	-5.18%
CityState Savings Bank	183,238,709.70	805,583,903.62	22.75%		278,638,718.52	814,736,342.62	34.20%		95,400,008.82	9,152,439.00	11.45%
Maritime SLA	22,008,969.77	68,824,229.22	31.98%		22,437,333.91	68,833,229.22	32.60%		428,364.14	9,000.00	0.62%
Card SME Bank Inc. (A Thrift Bank)	44,750,007.39	140,444,945.62	31.86%		35,612,569.77	150,765,995.91	23.62%		-9,137,437.62	10,321,050.29	-8.24%
BPI Direct Savings Bank	154,986,189.75	715,894,536.42	21.65%		192,765,341.89	842,173,596.94	22.89%		37,779,152.14	126,279,060.52	1.24%
BPI Globe Banko Inc. Savings Bank	48,463,565.60	551,847,301.15	8.78%		115,638,821.68	524,444,707.32	22.05%		67,175,256.08	-27,402,593.83	13.27%
The Queen City Development Bank	150,795,153.67	698,722,234.47	21.58%		148,964,053.39	691,016,996.13	21.56%		-1,831,100.28	-7,705,238.34	-0.02%
Optimum Development Bank	177,091,389.88	641,570,262.55	27.60%		110,314,399.99	687,108,808.57	16.05%		-66,776,989.89	45,538,546.02	-11.55%
Pacific Ace Savings Bank	14,654,703.21	72,593,155.07	20.19%		11,952,763.66	76,675,258.62	15.59%		-2,701,939.55	4,082,103.55	-4.60%
Dungganon Bank	6,144,035.78	60,321,880.63	10.19%		8,625,732.80	64,443,329.59	13.38%		2,481,697.02	4,121,448.96	3.20%
Bataan SLA	9,520,893.58	79,897,380.54	11.92%		10,355,017.82	78,699,471.64	13.16%		834,124.24	-1,197,908.90	1.24%
Bank One Savings and Trust Corp.	NA	NA	NA		56,734,307.10	523,963,118.72	10.83%		NA	NA	NA
Merchants Savings & Loan Association Inc.	12,176,854.20	721,264,073.21	1.69%		72,283,885.91	669,331,235.75	10.80%		60,107,031.71	-51,932,837.46	9.11%
HSBC Savings Bank (Phils) Inc.	313,101,336.61	1,830,846,012.02	17.10%		274,773,025.74	2,888,194,472.00	9.51%		-38,328,310.87	1,057,348,459.98	-7.59%
Isla Bank (A Thrift Bank) Inc.	51,492,341.60	625,764,495.92	8.23%		54,788,316.84	631,893,880.25	8.67%		3,295,975.24	6,129,384.33	0.44%
Sun Savings Bank	6,141,691.01	73,296,710.78	8.38%		6,258,125.99	76,867,112.54	8.14%		116,434.98	3,570,401.76	-0.24%
Progress SLA	12,101,531.88	85,031,839.07	14.23%		6,718,147.53	84,802,928.79	7.92%		-5,383,384.35	-228,910.28	-6.31%
BDO Elite Savings Bank	93,351,974.68	1,470,452,260.33	6.35%		93,317,372.04	1,507,557,562.16	6.19%		-34,602.64	37,105,301.83	-0.16%
Century Savings Bank	40,666,399.73	846,901,386.59	4.80%		42,961,702.12	875,210,065.34	4.91%		2,295,302.39	28,308,678.75	0.11%
City Savings Bank	10,776,774,942.32	1,388,719,074.33	776.02%		NA	NA	NA		NA	NA	NA
Grand Total	98,374,375,563.06	74,650,707,015.73	131.78%		89,702,249,613.29	85,987,882,856.10	104.32%		-8,672,125,949.77	11,337,175,840.37	-27.46%

Source: www.bsp.gov.ph

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 December 31, 2011 and March 31, 2012 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. 

Philippine Commercial Banks Show Further Improvement in the 1st Qtr. of 2012

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 Commercial Banks increased by PhP 5.1 billion or 0.94% from December 31, 2011 to March 31, 2012.  This increase was offset by a 6.66% increase in their Total Capital Cushion during the same period.  As a result, the Ratio of Total Distressed Assets to Total Capital Cushion of Philippine Commercial Banks decreased by 4.24%, from 79.09% as of December 31, 2011 to 74.85% as of March 31, 2012.  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. United Coconut Planters Bank (35.83% decrease)
2. HongKong & Shanghai Banking Corporation (22.75% decrease)
3. Security Bank Corporation (19.80% decrease)
4. Bank of the Philippine Islands (19.42% decrease)
5. Asia United Bank (19.03% decrease)
6. Maybank Philippines (18.76% decrease)
7. East West Banking Corporation (17.47% decrease)

The banks that exhibited significant deterioration in this ratio include:

1. Internationale Nederlanden Groep BK (510.55% increase)
2. BDO Private Bank (33.13% 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 1st Qtr. of  2012.

United Coconut Planters Bank continues to rank as the most distressed commercial bank in the country.  Its Total Distressed Assets are more than six times its Total Capital Cushion.  It must be noted that this ratio is down significantly from year-end 2011, when its Total Distressed Assets were ten times its Total Capital Cushion. Only one bank ranked as distressed in the 4th Qtr. of 2011 showed a deterioration in their distressed ratios as of March 31, 2012.  This bank, namely Philippine Bank of Communications, showed a 10.87% increase in its distressed ratio.

All the banks that were flagged as borderline insolvent (highlighted in yellow) as of December 31, 2011 remain borderline insolvent as of March 31, 2012.  However, as a group the distressed banks showed some improvement in their Total Distressed Assets/Total Capital Cushion Ratios.  This ratio now stands at 209.98% as of March 31, 2012, down from 218.34% as of December 31, 2011.

Philippine Commercial Banking System
Total Distressed Assets/ Total Capital Cushion
December 31, 2011 to March 31, 2012
In PhP
Bank	December 31, 2011	March 31, 2012	Variance	% Variance
Internationale Nederlanden Groep BK	11.35%	69.30%	57.95%	510.55%
BDO Private Bank, Inc.	2.49%	3.32%	0.83%	33.13%
Philippine Bank of Communications	160.10%	177.50%	17.40%	10.87%
Rizal Commercial Banking Corporation	64.70%	69.50%	4.80%	7.42%
Metropolitan Bank & Trust Company	62.99%	66.05%	3.05%	4.85%
Al-Amanah Islamic Bank of the Philippines	15.47%	15.47%	0.00%	0.00%
Philippine National Bank	147.76%	147.39%	-0.37%	-0.25%
Bank of Commerce	162.20%	161.68%	-0.52%	-0.32%
Union Bank of the Philippines	85.31%	84.91%	-0.41%	-0.47%
Banco De Oro Unibank	59.90%	58.25%	-1.65%	-2.76%
Development Bank of the Philippines	49.44%	47.23%	-2.21%	-4.47%
Land Bank of the Philippines	65.30%	61.63%	-3.67%	-5.61%
Philippine Trust Company	55.45%	51.82%	-3.63%	-6.55%
China Banking Corporation	57.42%	53.10%	-4.32%	-7.52%
Philippine Veterans Bank	195.56%	180.74%	-14.82%	-7.58%
Allied Banking Corporation	71.45%	66.02%	-5.43%	-7.60%
Robinsons Bank Corporation	22.46%	20.50%	-1.96%	-8.73%
Chinatrust (Philippines) Commercial Banking Corporation	18.43%	16.53%	-1.90%	-10.30%
East West Banking Corporation	68.36%	56.41%	-11.94%	-17.47%
Maybank Philippines Inc.	51.65%	41.96%	-9.69%	-18.76%
Asia United Bank Corporation	62.14%	50.32%	-11.82%	-19.03%
Bank of the Philippine Islands	63.71%	51.34%	-12.37%	-19.42%
Security Bank Corporation	47.14%	37.80%	-9.34%	-19.80%
HongKong & Shanghai Banking Corporation	71.76%	55.44%	-16.33%	-22.75%
United Coconut Planters Bank	1003.58%	643.97%	-359.61%	-35.83%
Group Total	79.09%	74.85%	-4.24%	-5.36%
Source: www.bsp.gov.ph

Philippine Commercial Banking System
Total Distressed Assets/ Total Capital Cushion
December 31, 2011 to March 31, 2012
In PhP
		December 31, 2011				March 31, 2012				Variance				% 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 %)		Total Distressed Assets (In %)	Total Capital Cushion (In %)	Distressed Assets/ Total Capital Cushion (In %)
United Coconut Planters Bank	58,210,111,052.92	5,800,229,638.98	1003.58%		58,346,163,511.76	9,060,379,410.73	643.97%		136,052,458.84	3,260,149,771.75	-359.61%		0.23%	56.21%	-35.83%
Philippine Veterans Bank	11,261,881,811.07	5,758,728,657.92	195.56%		11,386,593,846.84	6,300,066,206.28	180.74%		124,712,035.77	541,337,548.36	-14.82%		1.11%	9.40%	-7.58%
Philippine Bank of Communications	9,471,188,959.63	5,915,638,902.18	160.10%		9,605,657,632.92	5,411,642,825.75	177.50%		134,468,673.29	-503,996,076.43	17.40%		1.42%	-8.52%	10.87%
Bank of Commerce	32,929,553,535.88	20,301,508,621.47	162.20%		32,940,752,605.77	20,373,765,341.59	161.68%		11,199,069.89	72,256,720.12	-0.52%		0.03%	0.36%	-0.32%
Philippine National Bank	61,539,362,228.07	41,647,300,624.97	147.76%		60,946,464,001.47	41,349,439,614.75	147.39%		-592,898,226.60	-297,861,010.22	-0.37%		-0.96%	-0.72%	-0.25%
Union Bank of the Philippines	38,822,563,049.10	45,506,545,040.66	85.31%		38,760,712,790.01	45,650,885,590.92	84.91%		-61,850,259.09	144,340,550.26	-0.41%		-0.16%	0.32%	-0.47%
Rizal Commercial Banking Corporation	24,131,710,175.80	37,298,479,029.45	64.70%		26,600,710,113.13	38,273,962,830.12	69.50%		2,468,999,937.33	975,483,800.67	4.80%		10.23%	2.62%	7.42%
Internationale Nederlanden Groep BK	623,286,587.93	5,491,404,385.19	11.35%		1,834,533,107.88	2,647,280,603.37	69.30%		1,211,246,519.95	-2,844,123,781.82	57.95%		194.33%	-51.79%	510.55%
Metropolitan Bank & Trust Company	63,787,741,208.04	101,261,532,842.48	62.99%		65,533,760,882.97	99,222,043,905.63	66.05%		1,746,019,674.93	-2,039,488,936.85	3.05%		2.74%	-2.01%	4.85%
Allied Banking Corporation	13,475,330,400.74	18,859,833,076.12	71.45%		13,399,669,031.50	20,296,906,255.80	66.02%		-75,661,369.24	1,437,073,179.68	-5.43%		-0.56%	7.62%	-7.60%
Land Bank of the Philippines	33,266,907,399.89	50,944,842,479.97	65.30%		33,900,145,235.73	55,001,642,722.05	61.63%		633,237,835.84	4,056,800,242.08	-3.67%		1.90%	7.96%	-5.61%
Banco De Oro Unibank	65,154,415,706.61	108,776,275,232.51	59.90%		69,886,800,878.72	119,983,815,083.47	58.25%		4,732,385,172.11	11,207,539,850.96	-1.65%		7.26%	10.30%	-2.76%
East West Banking Corporation	7,972,097,612.88	11,662,142,632.92	68.36%		8,685,415,309.09	15,395,752,915.64	56.41%		713,317,696.21	3,733,610,282.72	-11.94%		8.95%	32.01%	-17.47%
HongKong & Shanghai Banking Corporation	3,990,058,443.49	5,560,159,799.26	71.76%		3,000,103,881.92	5,411,909,952.04	55.44%		-989,954,561.57	-148,249,847.22	-16.33%		-24.81%	-2.67%	-22.75%
China Banking Corporation	23,774,532,770.51	41,406,720,599.32	57.42%		22,076,228,426.80	41,575,673,227.32	53.10%		-1,698,304,343.71	168,952,628.00	-4.32%		-7.14%	0.41%	-7.52%
Philippine Trust Company	8,112,568,190.46	14,631,348,671.35	55.45%		8,561,718,369.96	16,523,217,254.71	51.82%		449,150,179.50	1,891,868,583.36	-3.63%		5.54%	12.93%	-6.55%
Bank of the Philippine Islands	50,047,779,686.11	78,556,544,290.98	63.71%		47,321,213,011.63	92,180,981,372.08	51.34%		-2,726,566,674.48	13,624,437,081.10	-12.37%		-5.45%	17.34%	-19.42%
Asia United Bank Corporation	5,941,452,139.74	9,561,736,538.00	62.14%		5,288,994,151.41	10,511,663,015.14	50.32%		-652,457,988.33	949,926,477.14	-11.82%		-10.98%	9.93%	-19.03%
Development Bank of the Philippines	17,694,996,122.18	35,788,905,692.76	49.44%		17,008,446,193.85	36,008,144,271.63	47.23%		-686,549,928.33	219,238,578.87	-2.21%		-3.88%	0.61%	-4.47%
Maybank Philippines Inc.	2,847,143,306.74	5,512,890,428.32	51.65%		3,037,504,931.61	7,239,824,313.81	41.96%		190,361,624.87	1,726,933,885.49	-9.69%		6.69%	31.33%	-18.76%
Security Bank Corporation	12,289,009,897.96	26,070,438,913.08	47.14%		12,390,822,425.97	32,777,702,285.12	37.80%		101,812,528.01	6,707,263,372.04	-9.34%		0.83%	25.73%	-19.80%
Robinsons Bank Corporation	1,173,989,648.85	5,226,473,730.40	22.46%		1,144,879,604.03	5,584,142,208.47	20.50%		-29,110,044.82	357,668,478.07	-1.96%		-2.48%	6.84%	-8.73%
Chinatrust (Philippines) Commercial Banking Corporation	1,112,691,065.96	6,036,104,571.35	18.43%		1,049,304,240.66	6,346,182,232.09	16.53%		-63,386,825.30	310,077,660.74	-1.90%		-5.70%	5.14%	-10.30%
Al-Amanah Islamic Bank of the Philippines	82,421,466.30	532,866,747.85	15.47%		82,421,466.30	532,866,747.85	15.47%		0.00	0.00	0.00%		0.00%	0.00%	0.00%
BDO Private Bank, Inc.	113,090,563.50	4,534,582,971.11	2.49%		168,810,398.09	5,084,420,800.74	3.32%		55,719,834.59	549,837,829.63	0.83%		49.27%	12.13%	33.13%
Group Total	547,825,883,030.36	692,643,234,118.60	79.09%		552,957,826,050.02	738,744,310,987.10	74.85%		5,131,943,019.66	46,101,076,868.50	-4.24%		0.94%	6.66%	-5.36%
Source: www.bsp.gov.ph

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 December 31, 2011 and March 31, 2012 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.