By Lawrence Agcaoili (The Philippine Star) Updated October 21, 2011 12:00 AM
MANILA, Philippines - The Bangko Sentral ng Pilipinas (BSP) reported
yesterday that banks managed to keep their capital levels significantly
above international standards despite the tensions in the Middle East
and North African (MENA) states as well as the sovereign debt crisis in
Europe.
BSP Governor Amando M. Tetangco Jr. said the capital adequacy ratios
(CARs) of the banking system remained healthy at 16.48 percent on a solo
basis and 17.39 percent on a consolidated basis as of end-March this
year from the revised end-December level of 15.99 percent and 16.93 percent.
"The Philippine banking system's capitalization remained robust despite
geopolitical tensions in the MENA region and concerns over sovereign
risk in Europe," Tetangco stressed.
He pointed out that the system wide risk-based measure of solvency
remained above the central bank's 10-percent minimum requirement and the
international benchmark ratio of eight percent under the Basel Accord.
The CAR is a ratio of a bank's capital to its risk and the central bank
tracks this indicator to ensure that banks have the capability to absorb
a reasonable amount of loss and that they are complying with their
statutory capital requirements.
Data released by the BSP yesterday showed the CAR of universal and
commercial banks improved to 16.42 percent as of end-March from 16.23
percent as of end-December on a solo basis and to 17.42 percent from
17.27 percent on a consolidated basis while that of thrift banks
improved to 16.11 percent from 12.62 percent on a solo and consolidated
bases.
On the other hand, the CAR of rural banks improved to 18.86 percent from
18.2 percent on a solo and consolidated bases while that of cooperative
banks increased to 16 percent from 17.13 percent on a solo and
consolidated bases.
Tetangco reported that the Tier 1 capital ratios of the banking system
remained high at 14.21 percent on a solo basis and 14.23 percent on a
consolidated basis after major players in the banking industry
successfully raised fresh equity through the issuance of various debt
instruments.
As a result, the BSP said the qualifying capital position of the banking
system climbed by 4.4 percent to P744.8 billion as of end-March from
P713.5 billion as of end-December on a solo basis and by 4.1 percent to
P815.3 billion from P783.4 billion on a consolidated basis.
On the other hand, the central bank pointed out that the risk weighted
assets of the banking system inched up by 1.3 percent to P4.519 trillion
as of end-March from the end-December level of P4.461 trillion on a solo
basis and by 1.3 to P4.687 trillion from P4.626 trillion on a
consolidated basis.
"The sustained strength of the banking system's CARs resulted from the
higher growth rate of qualifying capital vis-a-vis that of risk weighted
assets," the BSP chief said.
The qualifying capital of universal and commercial banks went up by 2.9
percent to P654.5 billion from P636.2 billion on a solo basis and by 2.4
percent to P764.6 billion from P746.2 billion on a consolidated basis
due to the additional issuance of common shares by two banks while that
of risk-weighted assets improved by 1.7 percent to P3.985 trillion from
P3.919 trillion on a solo basis and by 1.6 percent to P4.389 trillion
from P4.32 trillion due to the expansion of loan exposures to private
corporations and investments in foreign currency-denominated debt
securities issued by the government.
Likewise, the BSP said the CAR of the thrift banking industry improved
due to the closure of the Aguirre-owned Banco Filipino Savings and
Mortgage Bank that was placed under the receivership of the state-run
Philippine Deposit Insurance Corp. (PDIC) last March 17.
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