PHILIPPINE BANKS remained strongly capitalized in the second quarter
last year but their capital adequacy ratios (CARs) slipped from the
previous quarter amid higher risk weighted assets, such as money it has
lent out.
The Bangko Sentral ng Pilipinas yesterday said in a statement the local
banks' CARs stood at 16.34% on solo basis and 17.25% on consolidated
basis as of end-June 2011.
"The [CARs] of the Philippine banking system remained within a tight
range of 16% to 17% despite global difficulties," the BSP said.
CAR indicates how much capital a bank has in relation to its risk
weighted assets. It provides a measure of a bank's financial strength.
Solo basis covers a bank minus subsidiaries, while consolidated basis
adds a bank's subsidiaries.
The CAR levels at end-June 2011 however, were lower than the levels
recorded as of end-March last year, which was 16.48% on solo basis and
17.39% on consolidated basis, the central bank said.
"The ratios ... declined from the previous quarter but this was due to
increases in risk weighted assets outpacing the growth in banks
capital," the BSP said.
Moreover, Tier 1 or core capital ratios remained high at 13.90% and
13.93% on solo and consolidated basis, respectively, the BSP said.
Banks' CAR exceeded the central bank's 10% minimum requirement and the
Basel Accord's 8% standard.
The BSP said qualifying capital increased by 2.4% quarter-on-quarter to
P762.9 billion on solo basis and by 2.7% to P837.4 billion on
consolidated basis.
"[The growth was] mainly due to net profits posted by banks and
additional issuances of capital instruments qualifying as lower Tier 2
capital," the central bank said.
Meanwhile, risk weighted assets rose by 3.3% quarter-on-quarter to P4.67
trillion on solo basis and by 3.6% to P4.854 trillion on consolidated basis.
As of June last year, universal and commercial banks had a CAR of 16.31%
on solo basis and 17.32% on consolidated basis, down from 16.42% on solo
basis and 17.42% on consolidated basis as of March 2011, the same BSP
statement showed.
The CAR of thrift banks, on the other hand, also slid to 15.53% as of
June last year from 16.11% as of March last year, on both solo and
consolidated basis.
CARs of rural and cooperative banks improved to 18.68% in the second
quarter of last year, from 18.6% in the previous quarter on both solo
and consolidated basis as well. -- Kathleen A. Martin
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