BSP: PHL banks' capital adequacy ratios way above the global standard
Local banks have more than adequate capital to absorb possible losses from financial risks they encounter in the course of doing business, according to official figures.
Latest indicators of the sufficiency of local banks’ capital to absorb possible losses show that their capital adequacy ratios—16.34 on solo basis and 17.25 percent on consolidated basis as of last June—are double the international standard of 8 percent, the Bangko Sentral ng Pilipinas (BSP) said Thursday.
“The CARs of the Philippine banking system remained within a tight range of 16 percent to 17 percent despite global difficulties,” BSP Governor Amando Tetangco stressed.
Ten percent is the CAR minimum requirement of the BSP.
June CAR levels were slightly lower than what they were in the previous quarter.
The end-March level was 16.48 percent on a solo basis and 17.39 percent on a consolidated basis.
“The ratio actually declined from the previous quarter but this was due to increases in risk weighted assets outpacing the growth in banks capital,” Tetangco said.
BSP data indicate that the increase in risk weighted assets was largely the result of additional investment in securities issued by various unrated counterparties and expansion of loan exposures to unrated corporations, banks, individuals for consumption and housing purposes.
Risk weighted assets of the banks rose by 3.32 percent to P4.67 trillion from P4.159 trillion on solo basis and 3.56 percent to P4.854 trillion from P4.687 trillion on a consolidated basis.
CAR ratios of universal and commercial banks were higher than those of thrift banks.
UKBs’ CAR at June 30 stood at 16.31 percent on solo basis and 17.32 percent on consolidated basis. The CAR of the thrift banks was 15.53 percent on solo and 15.53 percent consolidated basis following the merger of a thrift bank and a commercial bank. — ELR, GMA News
Latest indicators of the sufficiency of local banks’ capital to absorb possible losses show that their capital adequacy ratios—16.34 on solo basis and 17.25 percent on consolidated basis as of last June—are double the international standard of 8 percent, the Bangko Sentral ng Pilipinas (BSP) said Thursday.
“The CARs of the Philippine banking system remained within a tight range of 16 percent to 17 percent despite global difficulties,” BSP Governor Amando Tetangco stressed.
Ten percent is the CAR minimum requirement of the BSP.
June CAR levels were slightly lower than what they were in the previous quarter.
The end-March level was 16.48 percent on a solo basis and 17.39 percent on a consolidated basis.
“The ratio actually declined from the previous quarter but this was due to increases in risk weighted assets outpacing the growth in banks capital,” Tetangco said.
BSP data indicate that the increase in risk weighted assets was largely the result of additional investment in securities issued by various unrated counterparties and expansion of loan exposures to unrated corporations, banks, individuals for consumption and housing purposes.
Risk weighted assets of the banks rose by 3.32 percent to P4.67 trillion from P4.159 trillion on solo basis and 3.56 percent to P4.854 trillion from P4.687 trillion on a consolidated basis.
CAR ratios of universal and commercial banks were higher than those of thrift banks.
UKBs’ CAR at June 30 stood at 16.31 percent on solo basis and 17.32 percent on consolidated basis. The CAR of the thrift banks was 15.53 percent on solo and 15.53 percent consolidated basis following the merger of a thrift bank and a commercial bank. — ELR, GMA News
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