PH BANKS STILL RESILIENT FROM ADEQUATE CAPITAL
THE Philippine banking system remains resilient from capital adequacy ratios (CARS) that continues to grow and exceeds the Bangko Sentral ng Pilipinas’ (BSP) minimum ratio of 10 percent and the Basel Accord’s standard ratio of 8 percent amid challenging g
However, other small banking units registered a decline as of December 2011. According to BSP, the system-- wide average CARs stood at 16.65 percent on a solo basis and 17.64 percent on consolidated basis as of end- December 2011, which were both 0.21-percentage point higher than the CARs posted as of end-September 2011.
Similarly, the Tier 1 capital ratios remained well above international norms at 14.45 percent and 14.48 percent on solo and consolidated bases, respectively.
The sustained strength of the banking system’s CARs resulted from the higher growth rate of qualifying capital vis- à- vis that of risk weighted assets (RWA).
On a quarter- on- quarter basis, qualifying capital grew by 2.65 percent, or P20.7 billion on solo basis, and 2.59 percent, or P22.3 bil- lion on a consolidated basis, mainly from net profits posted by banks and additional issuances of capital instruments. RWA, on the other hand, increased by 1.36 percent, or P64.7 billion on solo basis and 1.38 percent, or P68.4 billion on a consolidated basis.
Universal, commercial banks
As of end-December 2011, the universal and commercial bank (U/KB) industry’s CARs increased by 0.31 percentage point and 0.29 percentage point to 16.66 percent and 17.72 percent on solo and consolidated bases, respectively.
On solo basis, the increase in the CAR of the industry was from the 3.17-percent growth in qualifying capital, which exceeded the growth in RWA of 1.26 percent.
The expansion in the industry’s capital base was mainly driven by the banks’ net profits for the fourth quarter of 2011 and some issuances of unsecured subordinated debt qualifying as lower Tier 2 capital.
On the other hand, the increase in RWA was largely driven by the expansion of loans granted to unrated private and government corporations, and consumer loans, which all attract a 100-percent risk weight.
Thrift banking
Meanwhile, the thrift banking industry’s CAR went down from 16.48 percent to 15.86 percent as of end-December 2011, on both solo and consolidated bases. The decline in the industry’s CAR was from the combined effect of the P500-million drop in the qualifying capital and the P11.4- billion hike in the industry’s RWA.
The growth in RWA mainly came from the industry’s additional investments in foreign currency-denominated debt securities issued by the national government and loans
to individuals for consumption and housing purposes.
The rural and cooperative bank (RB/coop) industry’s CAR stood at 18.17 percent as of the fourth quarter of 2011, which was 0.40-percentage point lower than that registered in the previous quarter.
The decrease in the RB/coop bank industry’s CAR was largely from the decrease in qualifying capital of 2.11 percent accompanied by an increase in RWA of 0.02 percent.
By peer groups, both the RB industry and the coop banks’ CARs slid to 18.44 percent and 15.73 percent, respectively.