Banks’ consolidated CAR improves to 16.99% in 2014 third quarter

The country’s large Basel 3-compliant banks reported better capital adequacy ratios (CAR) of 16.99 percent as of endSeptember 2014 from the previous quarter’s 16.66 percent on consolidated basis.

On solo ratings, the CAR of universal and commercial banks stood at 16.32 percent, higher than end- June 2014’ s 15.94 percent, according to the Bangko Sentral ng Pilipinas (BSP).

“The bank’s CAR figures indicate that (big banks) maintain sufficient buffer against unexpected losses that may arise during times of stress,” the BSP said in a statement.

The banks’ common equity tier 1 (CET1) which the central bank said is the highest quality among capitaleligible instruments, is equivalent to 13.73 percent of risk weighted assets on solo basis and 14.49 percent on consolidated basis.

The tier 1 ratios – composed of common equity and qualified capital instruments – as of end-September was at 13.94 perent on solo basis and 14.56 percent on consolidated basis.

The BSP said the increase in CAR was attributed to banks’ capital-raising efforts, as well as additional capital infusion from foreign- owned banks with domestic branches. “This enabled banks to increase their total qualifying capital,” said the central bank.

As of end-September, qualifying capital on solo basis went up to 923.23 billion from the previous quarter’s

882.17 billion. On consolidated basis, this increased to 1.08 trillion from 1.03 trillion.

The big banks’ risk weighted assets increased to 5.7 trillion from 5.5 trillion end- June on solo basis as lending to the corporate sector increased. On consolidated terms, risk weighted assets rose to 6.37 trillion from 6.18 trillion of the previous quarter.

This is the third CAR report under the Basel 3 regime.

“Under the broader banking reform agenda, the BSP continues to monitor the capital position of banks vis-à-vis their risk taking activities,” said the BSP. “A strong capital position promotes financial stability which is a key policy objective of the BSP.”