Philippine banks well capitalized, BSP says

Philippine banks have enough capital to withstand risks such as loan defaults prompted by exposure of corporate borrowers to the raging eurozone crisis, according to the Bangko Sentral ng Pilipinas.

The BSP on Thursday reported that the banks’ average capital adequacy ratio (CAR) stood at 16.65 percent at the end of 2011, exceeding the 10-percent minimum requirement.

This was also more than double the 8-percent floor prescribed by the international community under Basel III, which is a set of global standards on bank regulation.

The latest CAR was better than the 16.44 percent registered at the end of September of 2011 and the 16.02 percent recorded at the end of 2010.

One of the key indicators of financial health of banks, CAR is the proportion of capital to the estimated amount of risk-weighted assets (RWA).

Combined capital of banks amounted to P803.6 billion, while risk-weighted assets were estimated at P4.83 trillion.

“The Philippine banking system remains resilient,” the BSP said in a statement, citing the latest report on bank capitalization in the country.

All banking sub-sectors in the country posted CARs above 10 percent at the end of last year, the central bank said.

The universal and commercial banking sub-sector registered an average CAR of 16.66 percent; thrift banking sector, 15.86 percent; rural banking sub-sector, 18.44; and cooperative banking sub-sector, 15.73 percent.

There were 726 banks operating in the country as of end-2011. Total banking network, which includes head offices and branches of banks, stood at 9,050, central bank data showed.

There were 38 universal and commercial banks, 71 thrift banks and 617 rural and cooperative banks.

Besides healthy capitalization, Philippine banks also enjoy growing profits and minimal exposure to bad debts, the BSP said.