Big banks remain well capitalized

MANILA, Philippines - Universal and commercial banks remained well-capitalized as of the third quarter last year, the Bangko Sentral ng Pilipinas (BSP) reported yesterday.

In a statement, the central bank said big banks’ capital adequacy ratio stood at 17.51 percent on solo basis and 18.62 percent on consolidated basis.

However, both figures are slightly lower than the 17.98 percent on solo basis and 19.24 percent on consolidated basis recorded in end-June last year.

“This was due to RWA (risk-weighted assets) increasing at a higher rate than qualifying capital,” the BSP said.

“The increase in the industry’s RWA was brought about by a rise in lending to various counterparties. The industry’s RWA rose by 3.56 percent on solo and 3.85 percent on consolidated bases,” it added.

The BSP also noted that the qualifying capital of banks slightly rose by 0.85 percent and 0.49 percent on  solo and consolidated bases, respectively.

“The increase was mainly driven by UKBs’ healthy net profits in the third quarter of 2013 but was moderated by the redemption of some banks of debt securities classied as Lower Tier 2 capital,” the BSP said.

“Said redemptions are expected due to the implementation of the new capital standards under Basel III beginning this January 2014 which derecognizes certain debt securities as qualifying capital,” the BSP said.

The big banks’ CAR continue to be well-above the BSP’s mandated 10-percent requirement for banks and the international standard of eight percent.

At the same time, Tier 1 or high quality capital of big banks stood at 16.36 percent on solo basis and 16.5 percent on consolidated basis as of end-September last year.

“The industry’s CAR figures indicate that UKBs continue to be mindful of the importance of setting aside sufficient capital,” the BSP said.

“A robust capital position promotes financial stability by providing individual banks and the industry with an adequate buffer against unexpected losses that may arise during times of stress.”