STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
TABLE OF CONTENTS
PAGE NO.
GLOSSARY OF TERMS……………………………………………… II
PROLOGUE…………………………………………………………. V
THE PHILIPPINE FINANCIAL SYSTEM: AN ASSESSMENT………… 1
THE PHILIPPINE BANKING SYSTEM…………………...... …. 9
UNIVERSAL AND COMMERCIAL BANKS……………… 29 THRIFT BANKS………………………………………… 48 RURAL BANKS…………………………………………. 64 COOPERATIVE BANKS…………………………………. 76
THE NON-BANK FINANCIAL INSTITUTIONS
NON-BANK FINANCIAL INSTITUTION WITH QUASI-BANKING FUNCTIONS (NBQBS)………….. 86 NON-STOCK SAVINGS AND LOAN ASSOCIATIONS…… 92
THE PHILIPPINE OFFSHORE BANKING SYSTEM…………….. 96 TRUST OPERATIONS…………………………………………. 99
TABLES
SCHEDULES
SCHEDULE 1 FINANCIAL INSTITUTIONS UNDER BSP SUPERVISION/REGULATION SCHEDULE 2 COMPARATIVE STATEMENT OF CONDITION SCHEDULE 3 SELECTED CONTINGENT ACCOUNTS SCHEDULE 4 TRUST AND FUND MANAGEMENT OPERATIONS SCHEDULE 5 COMPARATIVE STATEMENT OF INCOME AND EXPENSES
APPENDIX 1 CHANGES IN BANK REGULATIONS (JANUARY TO DECEMBER 2004) APPENDIX 2 DIRECTORY OF PHILIPPINE BANKS’/NBQBS’/OFFSHORE BANKS’ HEAD OFFICES
Source: Office of Supervisory Policy Development, Supervision and Examination Sector
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
GLOSSARY OF TERMS
A. SELECTED ACCOUNTS
1. Total assets refer to the sum of all assets, adjusted to net off the accounts “Due from Head Office/Branches/Agencies” and “Due to Head Office/Branches/Agencies” of foreign bank branches. 2. For purposes of computing the average, one period covers 12 months a. Average assets refer to the sum of total assets for two periods divided by 2. b. Average capital refers to the sum of total capital accounts for two periods divided by 2. c. Average earning assets refer to the sum of earning assets for two periods divided by 2. d. Average interest-bearing liabilities refer to the sum of interest-bearing liabilities for two periods divided by 2.
3. Total capital refers to the sum of paid-in capital of locally incorporated banks, assigned capital and the qualified capital allowable component of the net “Due To/Due From Head Office/Branches/Agencies” accounts of branches of foreign banks plus surplus, surplus reserves, undivided profits and appraisal increment reserves. 4. Earning assets refer to the sum of loans (gross of allowance for probable losses) and investments (gross of allowance for probable losses), exclusive of equity investment (gross of allowance for probable losses). 5. Fee-based income refers to the sum of bank commissions, service charges/fees, and other fees/commissions. 6. Interest-bearing liabilities refer to the sum of deposit liabilities, bills payable and unsecured subordinated debt. 7. Liquid assets refer to the sum of cash and due from banks and investments (net of allowance for probable losses) exclusive of equity investments (net of allowance for probable losses). 8. Net income before tax refers to the sum of net operating income and extraordinary credits/(charges). 9. Net interest income refers to the difference between total interest income and total interest expense. 10. Net operating income refers to the difference between operating income and operating expenses. 11. Non-interest income refers to the sum of fee-based income, trading income, trust department income and other non-interest income.
Source: Office of Supervisory Policy Development, Supervision and Examination Sector ii
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
12. Non-performing loans (NPL) refer to past due loan accounts whose principal and/or interest is unpaid for thirty (30) days or more after due date (applicable to loans payable in lump sum and loans payable in quarterly, semi-annual or annual installments), including the outstanding balance of loans payable in monthly installments when three (3) or more installments are in arrears, the outstanding balance of loans payable daily, weekly or semi-monthly installments when the total amount of arrearages reaches ten percent (10%) of the total loan receivable balance, restructured loans which do not meet the requirements to be treated as performing loans under existing rules and regulations, and all items in litigation. Effective September 2002, NPLs exclude loans classified as Loss in the latest BSP examination which are fully covered by allowance for probable losses and applicable to a bank with no unbooked valuation reserves and other capital adjustments required by the BSP (Circular No. 351). 13. Non-performing assets (NPA) refer to the sum of non-performing loans (NPL) and real and other properties owned and acquired (ROPOA). Effective March 2003, NPAs exclude performing sales contract receivable, which met certain requirements under Circular No. 380. 14. Distressed assets refer to the sum of NPLs, ROPOA, gross and current restructured loans. Effective end-July 2004, performing restructured loans replaced current restructured loans. 15. Gross assets refer to total assets, net of reserves plus loan loss reserves (LLR) plus provision for ROPOA. 16. Operating expenses refer to the sum of bad debts written off/provisions for probable losses, overhead costs and other expenses. 17. Operating income refers to the sum of net interest income and non-interest income. 18. Overhead costs refer to the sum of non-loan related operating expenses such as compensation/fringe benefits, depreciation and amortization, etc. 19. Trading income refers to the sum of trading gains/(losses), foreign exchange profits/(losses), gold trading gains/(losses) and profit/(loss) on sale of redemption of investments.
B. FINANCIAL AND OTHER RATIOS
1. Capital adequacy ratio (CAR) refers to the ratio of capital to risk weighted assets computed in accordance with the risk-based capital adequacy framework (patterned after the 1988 Basle Capital Accord) that took into account credit risks, effective 1 July 2001 under BSP Circular No. 280 dated 29 March 2001. Under BSP Circular No. 360 dated 3 December 2002, which took effect 1 July 2003, applying only to universal/commercial banks, computation of CAR incorporates market risks in addition to credit risks. 2. Cost-to-income ratio refers to the ratio of operating expenses (exclusive of bad debts written off/provisions for probable losses) to operating income.
Source: Office of Supervisory Policy Development, Supervision and Examination Sector iii
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
3. Density ratio refers to the ratio of the total number of domestic banking offices to the total number of cities/municipalities in the Philippines. 4. Distressed assets ratio refers to the ratio of distressed assets to total loans (gross of allowance for probable losses), inclusive of interbank loans, plus ROPOA, gross 5. Earning asset yield refers to the ratio of total interest income to average earning assets. 6. Funding cost refers to the ratio of total interest expense to average interest-bearing liabilities. 7. Interest spread refers to the difference between earning asset yield and funding cost. 8. Liquid assets ratio refers to the ratio of liquid assets to total deposits. 9. Net interest margin refers to the ratio of net interest income to average earning assets. 10. NPA coverage ratio refers to the ratio of allowance for probable losses on non- performing assets (NPA) to total NPA. 11. NPA ratio refers to the ratio of NPA to total assets, gross of allowance for probable losses. 12. NPL coverage ratio refers to the ratio of allowance for probable losses on non- performing loans (NPL) to total NPL. 13. NPL ratio refers to the ratio of non-performing loans (NPL) to total loans (gross of allowance for probable losses), inclusive of interbank loans. 14. Population-to-banking offices ratio refers to the ratio of the total population to the total number of domestic banking offices. 15. Return on assets refers to the ratio of net income after tax (NIAT) to average assets. 16. Return on equity refers to the ratio of NIAT to average capital.
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Source: Office of Supervisory Policy Development, Supervision and Examination Sector iv
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
PROLOGUE
The Status Report on the Philippine Financial System is a semestral report prepared by the Office of Supervisory Policy Development (OSPD), Supervision and Examination Sector, Bangko Sentral ng Pilipinas (BSP), and is submitted by the Governor to the President and the Congress in compliance with Section 39 (c), Article V of the New Central Bank Act (R.A. No. 7653).
This report is basically culled from the various periodic reports submitted by BSP supervised/regulated institutions submitted to the BSP Statistical Data Center (SDC), Supervision and Examination Sector. At end-December 2004, BSP supervised/regulated Financial Institutions consisted of 893 banks with 6,719 branches and other offices, 5,879 non- bank financial institutions (NBFIs) with 5,696 branches and 9 offshore banking units (OBUs) with one other office (Schedule 1).
Effective 3 July 1998, the supervision and regulation of the BSP over non-banking entities were turned over to the Securities and Exchange Commission (SEC) for corporations and partnerships, and to the Department of Trade and Industry (DTI) for single proprietorships, in accordance with Section 30 of R.A. No. 7653, except the following: non-banks with quasi- banking functions and/or with trust or Investment Management Activities (IMA) license, non- banks which are subsidiaries/affiliates of banks and quasi-banks, non-stock savings and loan associations, pawnshops and venture capital corporations. Likewise, the supervision and regulation over building and loan associations were transferred to the Home Guarantee Corporation effective 7 February 2002, in accordance with Section 94 of R.A. No. 8791 (The General Banking Law of 2000).
Source: Office of Supervisory Policy Development, Supervision and Examination Sector v
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
THE PHILIPPINE FINANCIAL SYSTEM: AN ASSESSMENT
The Philippine financial system remained stable and managed to grow broadly in line with the continuing recovery of the economy. The improving, albeit uneven, economic conditions continued to test the resiliency of the banking system. However, the hard numbers generated by the banking sector for the year somewhat belie the current challenging environment and are in fact encouraging as these indicate that the banking reform measures in the past years are gradually making a difference.
Overall, the banking sector in 2004 sustained its recovery and further improved its performance with profitability indicators at comfortable levels and other growth fundamentals consistently improving amidst the difficult economic environment. Banks in particular remained focused on their core expertise and strategic in taking advantage of potential alternative markets resulting to this year’s favorable bottomline figures. Parallel to this, assets continued to grow with corresponding expansion in loan and investment portfolios while simultaneously improving asset quality with the reduction in non-performing assets (NPAs). While this development remains satisfactory, performance level can be further raised to facilitate the much-needed impact to the overall economy.
Favorably though, the reform momentum that the BSP has carefully nurtured over the years is slowly but surely gaining ground to achieve the broad objectives of developing a stable banking system responsive to the needs of a growing economy and of ensuring a balanced progress in the country’s financial system through the accelerated development of the domestic capital market. Said two-pronged reform strategy serves as the main driver of sustainable economic progress over the long-term.
Broadly, the BSP continued its reform initiatives centered on: a) improving the BSP’s supervision technology and capacity, b) enhancing the prudential regulatory environment of the banking system, c) strengthening corporate governance principles and market discipline and d) initiating capital market reform and development during the year in review.
First, a robust banking system relies on a sound supervisory environment that can effectively manage the increasingly challenging and complex financial system. The broad range of policy reforms to enhance the global competitiveness of the banking sector was anchored on the concepts of consolidated supervision. It had also shifted to international standards and best practices framework that calls for strengthened bank risk management practices through risk-based supervision.
This framework allows regulators to proactively respond to the mounting issues associated with conglomerate structures and cross border issues. It also enhances the quality of banking supervision and optimizes the use of supervisory resources. The BSP steered institution-wide changes designed to realign the processes and systems in the supervision and examination of banks to global standards. One particular development in 2004 was the formal establishment of the Financial Sector Forum (FSF). (Box 1) The FSF serves as a coordination mechanism among financial regulators to harmonize regulatory policies, enhance information sharing and promote consumer protection.
Source: Office of Supervisory Policy Development, Supervision and Examination Sector
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STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
Box 1
The Financial Sector Forum: Adopting a Comprehensive
Approach to Supervision
The increasingly global financial environment has significantly influenced the manner in which banking regulators deal with issues on management of financial activities. As enunciated by the Basle Committee in the 1997 Basle Core Principles for Effective Supervision, financial conglomerates generally operate as integrated entities and manage risk on a global basis across business lines. Consequently, banking supervisory authorities must have the ability to supervise the consolidated banking organization, i.e, the ability to review both banking and non-banking activities conducted in the banking organization, either directly or indirectly (through subsidiaries and affiliates), and activities conducted at both domestic and foreign offices. It is also vital for banking supervisors to establish cooperative arrangements with other Parallelregulatory to strengthening authorities with banking respect supervisio to supervisionn, the of country’s specific entitiesprudential within regulatory the organization’s structure to achieve seamless supervision.
In the Philippines, the adoption of the consolidated approach to supervision recently gained added momentum with the establishment of the Financial Sector Forum (FSF). The FSF is a voluntary interagency body created for the purpose of enhancing the conduct of supervision and regulation of the
financial system. Spearheading the FSF are the lead regulatory agencies in the financial sector, namely, the Bangko Sentral ng Pilipinas (BSP), the Securities and Exchange Commission (SEC), the Insurance Commission (IC), and the Philippine Deposit Insurance Corporation (PDIC).
Formally established on 5 July 2004 with the signing of a Memorandum of Agreement (MOA) among its members, the FSF provides the venue for effectively addressing common supervisory and regulatory concerns with the view of harmonizing and coordinating policies and methods for enhanced supervision and regulation of financial institutions in the country.
The Forum serves to further complement existing bilateral agreements between the BSP and the SEC for sharing supervisory responsibility, and between the BSP and PDIC for information sharing. Although not intended to be a regulatory superbody, the FSF’s mandate covers a much broader area with both a strategic and operational perspective and its work will be on an ongoing basis. In addition, the FSF recognizes and respects the distinct mandates of each member agency.
With the creation of FSF, supervisory authorities hope to phase in a more comprehensive approach to supervision across the financial system. In its initial meetings, the FSF has identified three major priority areas: coordination of supervisory and regulatory methods and policies; reporting and information exchange and dissemination; and consumer protection and education. The FSF, through its multilateral committees, is currently working on the review, alignment, and development of guidelines on the areas of risk management, capital adequacy, issuance of securities by non-banks, prudential limits, collective investment schemes, and analogous insurance products. Initiatives are also being undertaken to rationalize disclosure requirements of firms that are covered by the mandates of the BSP, SEC, IC and the PDIC; implement an information sharing mechanism among the four member agencies; and uphold consumer protection through the development of an integrated financial literacy program.
Source: Office of Supervisory Policy Development, Supervision and Examination Sector 2
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STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
Agency Mandate
BSP Supervises and conducts periodic or special examinations of banking institutions and quasi-banks, including their subsidiaries and affiliates engaged in allied activities (Sec. 25 of R.A. No. 7653)
Supervises over the operations of, and exercises regulatory powers over quasi-banks, trust entities and other financial institutions which under special laws are subject to Bangko Sentral supervision (Sec. 4 of R.A. No. 8791)
SEC Supervises over the operations of all corporations, partnerships or associations which are the grantees of primary franchises and/or licenses or permits issued by the government
Formulates policies and recommendations on issues concerning the securities markets (Sec. 5 of R.A. No. 8799)
IC Exercises regulatory and supervisory authority over insurance companies (P.D. No. 1460, as amended)
PDIC Insures the deposits of all banks within a prescribed ceiling and as such monitors banks’ conditions to manage and assess risks (R.A. No. 3591, as amended) in close coordination with the BSP.
Internally, the BSP is continuously building its supervisory capacity through training- based capacity-building programs to enhance the knowledge and skills of its examiners at par with global improvements in supervisory approaches and techniques.
Second, prudential regulations and the entire regulatory environment were continually upgraded to re-align with international standards and best practices; thereby preventing systemic risks and strengthening the banking system. With non-performing loans and assets still a drain to the banks’ balance sheets, the BSP issued an amendment to the previously issued Memorandum to All Banks/Non-Bank Financial Institutions with Quasi- Banking Functions (MAB/NBQB) last 16 February 2004 to provide regulatory relief to banks that qualify for privileges under Special Purpose Vehicle (SPV) transactions. This was further supported by Monetary Board Resolution No. 135 dated 5 February 2004, which approved the revised accounting for the sale of NPAs to SPVs. These initiatives send a strong signal for banks to make the asset cleanup a priority, as this becomes the pre-requisite for the full implementation of Basel 2 and International Accounting Standards (IAS) in the Philippines. For 2004, SPV-related transactions amounted to P26.2 billion from the 121 certificates of eligibility (COE) issued by the Bangko Sentral, lowering the banking system’s NPL ratio to 12.5 percent.
Source: Office of Supervisory Policy Development, Supervision and Examination Sector 3
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STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
Other regulatory measures issued during the year in review aim to address the concerns on credit risk, risk-based capital adequacy framework, capital treatments, DOSRI lending, single borrower’s limit, e-banking, bank’s internal rating systems, use of IBODI holdings in securities lending and repurchase agreements, reserve requirements for common trust funds (CTF), accreditation of banks and NBFIs as trustees of bond issuance by any municipality, government owned or controlled corporation, and uniform application of reserves for bad debts (see also Appendix 1). Some of these key regulatory improvements like the consolidation of DOSRI and SBL rules are in line with BSP’s compliance to the Basel core principles on banking supervision.
Considering that laundered funds can be deposited or wired through bank accounts and the banking system can be a tool of money laundering activities, the BSP also issued Circular No. 451 last 14 September 2004 lowering the covered transaction from P4 million to P500,0001 in support of the international crusade against money laundering.
Third, a strong banking system cannot ensue if corporate governance and market discipline mechanisms are weak. In this area, the BSP implemented key regulations to institutionalize good governance principles and to expand the disclosure and transparency requirements for its supervised entities as a component of the banking reform agenda. Major initiatives included the implementation of a system of corporate governance standards for financial institutions, the establishment of compliance monitoring mechanisms, the adoption of sound accounting rules based on international best practices, and the engagement of independent external auditors to promote financial transparency outlined under Circular No. 455 (Box 2). Moreover, the responsibility of the board of directors in enforcing corporate governance standards in their organization is reflected in the circulars issued by the Bangko Sentral for 2004 (see also Appendix 1). Circular No. 434, for example, adds the creation of an Audit Committee to the specific duties and responsibilities of the board to allow more stringent compliance standards on corporate governance. Cognizant of the international high- profile corporate abuses that became public in recent history, the new era of corporate governance requires much involvement, accountability and responsibility from the board of directors in their respective organizations.
Finally, parallel to banking reforms is the long overdue development of the domestic capital market to facilitate a stronger and more efficient financial system in the Philippines. The simultaneous development of the banking system and capital markets is the fundamental pillar that will support a sustainable economic growth. In this regard, the BSP has been actively involved and in the forefront of reforms to establish the key market infrastructure and mechanisms to deepen liquidity in the capital market.
1 This is in line with international standards and the recommendations of the Financial Action Task Force on Money Laundering (FATF). In 2005, regulatory efforts bore fruit when FATF finally removed the Philippines from its list of Non-Cooperative Countries and Territories.
Source: Office of Supervisory Policy Development, Supervision and Examination Sector 4
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STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
Box 2
The Role of External Auditors in Instilling Market Discipline
The Bangko Sentral ng Pilipinas (BSP), In order to foster corporate governance in the under Section 58 of the General Banking financial system, full disclosure is required from external Law (GBL) of 2000 and Section X164 of auditors of banks and other supervised entities. In the Manual of Regulation for Banks addition, comments and findings in the audit (MORB), requires banks and other engagement shall also be submitted within 30 days after supervised entities to hire independent submission of the audit report. The annual financial external auditors from the list of BSP audit report shall be submitted to the BSP not later than selected certified public accountants 90 banking days after the start of audit. and auditing companies. In ensuring that reliance of the regulatory The policy upholds the authorities and the public on the opinion of external independence of external auditors and auditors is well placed, the BSP issued Circular No. 410 promotes high ethical and professional last October 2003. The Circular prescribes rules and standards in public accounting and at regulations governing the selection and delisting of the same time enhance the exchange of external auditors, which can be engaged by banks, information between external auditors quasi-banks, trust entities, non-stock savings and loan and the BSP. associations and other financial institutions.
The primary role In instilling market Under the said Circular, the external auditor of a of external auditors is discipline, the supervised financial institution shall be changed or the to act as catalysts of presence of external lead concurring partner shall be rotated every 5 years or auditors ensures the corporate governance earlier to safeguard the independence and fairness of integrity, in instilling the codes accountability and the audit process. The preceding policy creates of fairness, transparency of mitigating mechanisms against insider abuse and accountability and financial reporting connivance inasmuch as prolonged relationship with transparency in audited entities puts the auditor’s independence at audited organizations. high risk. Case in point is the Enron scandal in 2001, It is the duty of external auditors to report which provided the basis for regulators to tighten up adverse findings such as fraud, dishonesty and upgrade banking supervision standards in line with and other material findings that international best practices. disadvantage the depositors, creditors or shareholders and impair the capital of the Circular No. 410 also includes guidelines on the bank. qualification required of external auditors and their disqualifications relating to financial interest, They should also delve into additional outstanding loan or credit accommodation and service disclosure requirements like the engagement either currently or during the preceding quantitative indicators of financial year that may impair the independence to the audited performance, capital-to-asset risk ratio, financial institution along with its subsidiaries and credit concentration, quality of loans and affiliates. assets together with adequacy of loss provisions. Moreover, external auditors External auditors play crucial roles in making market may also conduct a specific review at discipline anchored on corporate governance the expense of the audited institution principles work. It is imperative, therefore, to have a when warranted by a supervisory ‘seamless’ cooperation between external auditors and concern and required by the Monetary bank supervisors to ensure the safety and public Board. accountability of banks and other supervised entities.
Source: Office of Supervisory Policy Development, Supervision and Examination Sector 5
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STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
Capital market development entails the creation of a real-time gross payments system dubbed as the PhilPaSS; the launching of the private sector-led Fixed Income Exchange (FIE); the issuance of various circulars (Circular Nos. 428 and 450) to establish the third party custodian system (Box 3); the accreditation of private rating agencies and the implementation of an interim framework for the creation of a central credit information bureau (CIB). Furthermore, the BSP formulated policies encouraging banks to issue alternative long-term instruments for their funding needs and to engage in alternative activities (Circular No. 447) designed to deepen the capital market (see also Appendix 1). On the legislative front, the BSP supported the passage of various laws to develop the local capital market and minimize the disincentives to secondary trading such as the Securitization Act of 2004, the Special Purpose Vehicle Law, and the removal of Documentary Stamp Tax or DST on secondary trading.
Said reform measures are widely in place but subject to further refinements in light of various emerging issues confronting the increasing sophistication of the financial sector. The road to domestic capital market development has been quite bumpy so to speak. Challenging the prevailing status quo is a Herculean task coupled with many obstacles and bottlenecks, most of which are artificially created to at least delay the inevitability of reform. However, the BSP remained focused with its reform agenda to get the country’s long-term fundamentals on track.
Corollary to banking reform and capital market development initiatives are the special programs and concerns of the Bangko Sentral in support of Government’s social reform agenda with respect to poverty alleviation and SME development in the countryside. In the last quarter of 2004, the President issued Proclamation No. 719 declaring 2005 as the Year of Microfinance in recognition of the crucial role of commercialized microfinancing to the economy particularly in bringing financial access to the enterprising poor. In this note, Bangko Sentral’s advocacies and special programs on microfinance also marked an improvement with the loans of 6 microfinance-oriented banks2 and the 179 rural and cooperative banks engaged in some level of microfinance reached P3.2 billion, benefiting more than 535,000 clients compared to last year’s 117 banks, P2.5 billion loans and 432,475 borrowers. Said development was largely due to the commercialization of microfinance in the country and further supported by Circular No. 409 that prescribes the careful monitoring of ‘portfolio at risk’, thereby a clear testament that sustainable microfinance can indeed provide that missing link of the financial market to the enterprising poor.
Summing up, the continuing recovery of the financial system is a rare window of opportunity given the underlying constraints but this window will not remain open unless fundamental reforms are undertaken to ensure that developments in the financial system can really pave the way for broad-based growth.
2 Banks with more than 50% of operations dedicated to microfinance
Source: Office of Supervisory Policy Development, Supervision and Examination Sector 6
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STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
Box 3
A Primer on Third Party Custodian System
What is a third party custodian system? The first requires the delivery of underlying Third party custodian system is an integral collateral securities to a BSP accredited custodian for part of the reform measures initiated by Bangko all borrowing/lending transactions with recourse Sentral to develop the local capital market. It (repos). The second requires the delivery of securities enhances existing regulations governing the sold on a without recourse basis to the purchaser or securities market and requires the delivery of to his designated BSP accredited custodian. Specific securities sold to accredited custodians, giving rules governing securities custodianship and registry the investor the option to choose between operations of banks and non-bank financial direct or indirect modes of delivery compliance institutions under the supervision of BSP are outlined in under Circular No. 392. Third party custodians Circular No. 428 dated 27 April 2004. refer to financial institutions accredited by BSP to take custody of purchased securities. What are the basic reforms of the third party custodian system? Why it is necessary to have the third party custodian system? It is envisioned to bring out three basic reforms: (1) proper delivery of securities by dealer banks and A well-functioning capital market requires a financial institutions, (2) acceptance of third party transparent and efficient system, an effective custodians as critical agents of investor protection regulation and an empowered investor. and capital market development and (3) formal and Without a third party custodian, the trading of organized trading in the secondary market. securities remains susceptible to market abuse and fraudulent transactions. The investor is held How is it going to change the current setup? captive in a non-transparent relationship with his dealer with little choice but to accept whatever Third party custodianship applies to both price is offered and worse, he is exposed to government and private issues. Considering that devious activities of dishonest dealers like more than 90% of the securities traded in the capital multiple sales. A big enough incident such as the market are government papers, the diagram below BanCap scam in the mid-1990s can be very illustrates the current setup governing the sale of destabilizing. Moreover, the financial system is at government securities (GS). The process starts when risk inasmuch as unscrupulous banks can the Bureau of the Treasury (BTr) issues treasury bills engage in undocumented buyback through regular auctions (primary market). The transactions to avoid reserve requirements proprietary securities account of the Government thereby exploiting the steep yield curve (large Securities Eligible Dealers (GSEDs) are credited for the interest rate differential between short-term and amount of securities purchased. These GSEDs then long-term interest rates) by funding long-term resell the securities to investors (secondary market). and high yielding securities with a series of low After the sale, the GSEDs instruct the BTr to transfer cost short-term reserve free obligations. The the securities to investor/client sub-account and the preceding scheme also significantly understates Registry of Scripless Securities (RoSS) effects the the size of bank’s balance sheet and the transfer. process allows the bank to take on additional risk without a corresponding capital buffer and Without the Third Party Custodian reduce the amount of supervision fees. ISSUER National Government What is the regulatory framework for the third 1 b) party custodian system? 1 a) Auctions DEALERS GSEDs 3 Instruct RoSS The third party custodianship system is built 2 Sell Proprietary Client Sub- upon the existing regulations of the Bangko Account of Account of Dealer 4 To Dealer Investor Sentral. Circular No. 392 dated 23 July 2003 for V ARIOU S No 1 I N V ESTO RS banks and Circular No. 450 dated 6 September Investor No. 2 2004 for non-bank financial institutions provide Investor No. 3 the delivery of securities in two main types of financial transactions. 1 of 2
Source: Office of Supervisory Policy Development, Supervision and Examination Sector 7
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STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
Box 3
With this setup, the BTr is the issuer, the registry and What are the specific roles and functions of third party the custodian of the GS (treasury bills). When a GSED custodians? sells said GS to investors, the security sold is not delivered to the purchaser. Instead, a GSED holds the GS for Third party custodians: (1) ensure that true sale occurred ‘safekeeping’ on behalf of the client and merely issues and recorded in the purchaser’s name, (2) prevent an acknowledgement document called “Confirmation unauthorized use of investor’s securities through further sale, of Sale” to the investor. The GS, however, remains under lending or collateralization and (3) eliminate the risk of the effective possession and control of the GSED. retraction by ensuring that the sale took place or was Everything that the client does goes through the GSED. consummated. So, if the GSED fools around, there is no countercheck because the RoSS solely relies on the GSEDs. In addition, What is the effect of the third party custodian on RoSS? in case the investors want to sell the purchased security before maturity, they are held captive in a non- Upon full implementation, the RoSS of the BTr will still be the transparent relationship with their GSEDs with little registry of GS but without the custodianship function. If the BTr choice but to accept whatever price is offered. Without will act as the custodian, it cannot perform ‘independently’ realizing it, the clients incur an opportunity cost. Thus, the without taking into consideration that it is also the issuer and arrangement is inherently risky to the clients/investors as registry of GS. As pointed out in the opinion issued by the far as too much trust is required to be placed in GSEDs, Department of Justice (DOJ) last 17 January 2005, the BTr who are always under severe pressure to make profit. cannot perform the dual roles of being a registrar and a
custodian of government securities at the same time due to an With a Third Party Custodian “irreconcilable conflict of loyalties”.
ISSUER How much are custody fees? National Government
1 a) Auctions 1 b) Under the framework for GS transactions, custody fee that may be paid by investor ranges from 1.5 to 4 basis points DEALERS 3 annually or a minimum amount of P40 per P100,000 of securities GSEDs Instruct RoSS under custody. It has to be cleared though that this is not Proprietary Client 2. Sell Account of Securities another layer of transaction costs because under the current Dealer Account of 4 To 3rd Party Custodian Securities setup where dealer banks acting as de facto custodians, Balances - Investor No. investors are also paying custody fees embedded in the VARIOUS 1 INVESTORS pricing. What the third party custodian system aims to achieve Securities Balances - is to make transaction costs more transparent for investors. 3. Appoint Investor No. 2 Report 1 Securities Meanwhile, private issues may have a different custody Balances - Report 2 Investor No. 3 fee structure based on the value and volume of traded issues. Third Party 5. Render Reports Report 3 Custodians How are the accredited custodians selected?
Under a third party custodian (see above diagram), The accreditation process for the accredited custodians the RoSS (upon instruction of the selling GSED) effects underwent a rigid and thorough selection process. Pre- the transfer of sold securities from the seller GSED’s qualification requirements are outlined in Circular No. 428 proprietary account to the third party custodian which includes the CAMELS composite rating of 4, minimum appointed by the customer/investor. The third party capital adequacy ratio of 12%, comprehensive risk custodian renders securities transaction reports at least management system and technological capability. Said quarterly to the customer/investor. Said reports are accreditation criteria were formulated through consultations matched with the document of conveyance that was with industry associations and strict selection rules setting to physically delivered to the customer/investor by the ensure investor confidence and protection under the proposed seller GSED. The transparency and efficiency of the system. independent third party securities custodian promote better investor protection and market integrity because What financial institutions are accredited by BSP to act the securities are lodged in a custodian not attached to as custodians? the seller GSEDs. In the end, the customer/investor will have the liberty to sell purchased securities to other Bangko Sentral has so far accredited five (5) banks and competing GSEDs. one (1) financial institution to act as third party custodians. This includes Citibank, Hong Kong Shanghai Banking Corporation (HSBC), Deutsche Bank, Standard Chartered Bank and the Bank of Philippine Islands (BPI) for banks and the Philippine Depository and Trust Corporation (PDTC) for non-bank financial institution.
Source: Office of Supervisory Policy Development, Supervision and Examination Sector 8
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
THE PHILIPPINE BANKING SYSTEM
OVERVIEW
The Philippine banking system in 2004 remained relatively healthy amid a continuing recovery in the economy and despite the occurrence of various local and international disturbances in the latter half of the year. The sector’s total assets increased by 9.9 percent from last year to settle at P4,023.3 billion as of end-December 2004. The expansion in assets was sustained by the double-digit growth in deposits by 12.0 percent to reach P2,766.4 billion and higher borrowings. The banking sector’s capital accounts stayed favorable and continued to post a positive growth of 5.5 percent with all components increasing. The most notable included the 3.4 percent increase in capital stock and 3.3 percent expansion in surplus, surplus reserves and undivided profits. Bank liquidity indicators remained sufficient and capital adequacy ratio was kept above the minimum requirement. (Table 1)
Lending growth for the year held on to a reasonable 4.0 percent (net of interbank loans), a slight acceleration compared to the 3.7 percent increase posted in 2003. The moderate lending activity of banks reflected the continuing concerns on their asset quality as non- preforming assets (NPAs) remained at double-digit ratio. However, there have been significant asset disposal towards the latter part of 2004 as the provisions of the SPV Law were winding down. Actual assets transferred to SPVs and assets in the process of disposal totaled a little over P90 billion as of the first week of April 2005. The decline in NPL/NPA levels, continuing growth in lending activity and marked growth in overall assets supported the slight improvement in asset quality indicators. The NPL ratio further declined to 12.5 percent from 13.8 percent in 2003 and loan loss coverage ratio increased to 58.0 percent. Likewise, the NPA ratio was lower at 11.8 percent from 13.2 percent last year with allowance for loss increasing to 33.2 percent.
Investments, net posted considerable growth of 26.1 percent in the absence of a broader pick-up in economic activity since banks remained wary in exposing themselves to further risks in lending. This has prompted banks to alternatively invest significant portions of their funds in government securities alongside the ongoing consolidation of government finances. These fixed income instruments offer banks reasonable market returns and are risk- free. Investments, net as a proportion to total assets significantly increased to 31.0 percent in 2004 from around only 17.0 percent in 1998.
Source: Office of Supervisory Policy Development, Supervision and Examination Sector 9
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
The banking system’s profitability indicators declined for the year due to the posting of a large non-recurring extraordinary credit in 2003. This was on account of the reversal of provisioning related to the rehabilitation of a commercial bank in that year. Net income after tax fell by 12.1 percent in 2004 and subsequently the banking system’s return on equity and return on assets were lower at 7.1 percent and 0.9 percent, respectively, compared to previous years’ levels. (Table 2) However, should the extraordinary credits in 2003 be netted out, profitability indicators continued to remain on an uptrend.
Notwithstanding the lower profitability indicators, overall operating income continued to outpace operating expenses, reflective of the improvement in asset quality and asset expansion in recent years. Net interest income growth accelerated rapidly by 24.5 percent due to improving net interest margins. Meanwhile, non-interest income was lower as trading gains were halved compared to levels posted in 2003, with the gradual rise in domestic and world interest rates. Despite this, banks remain creative in further augmenting their income from other non-interest sources such as from fee-based income that include bank commissions and service charges. Fee-based earnings kept gaining ground and posted a strong 12.5 percent growth for the year.
On the other hand, operating expenses jumped by 5.6 percent despite lower loss provisioning, breaking the downtrend of costs seen in prior years. This was largely on account of higher compensation and benefits of manpower resources, higher taxes particularly the re- imposition of the gross receipts tax, higher occupancy rentals, and expansion of service capacity such as increasing and upgrading ATM network, opening and refurbishing of branches, and expanding electronic banking services. This expansion of service delivery channels of banks should positively support bottom line figures in the near term.
OPERATING NETWORK
The total number of head and other offices of the banking system increased by 118 or 1.6 percent to 7,612 as of end-December 2004, from 7,494 at end-December 2003. In terms of head offices, a total of 4 banks closed during the year, 2 thrift banks and 2 rural banks. Universal and commercial banks maintained their number. Meanwhile, the re-opening of 1 closed thrift bank, entry of 1 thrift bank and 1 rural bank partly offset the closures. In terms of conversion and consolidation/merger, 4 thrift banks were relegated to rural bank status while 3 cases of mergers involving 7 rural banks were effected.
The net increase of 124 bank branches and other offices was on account of re-opened branches/other offices of merged/converted banks in 2004. The bulk of branch expansion came from rural and cooperative banks which increased by 83 branches partly on account of the 15 branches of converted thrift banks. This was followed by commercial banks with 35
Source: Office of Supervisory Policy Development, Supervision and Examination Sector 10
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004 branches, of which the majority were from private domestic commercial banks (32 branches). The rest came from thrift banks with 8 banking offices. Only universal banks had a decline of 2 banking offices in 2004. On a geographical basis, the expansion of bank branches was mainly in Luzon (51 branches) and the NCR (42 branches) areas. Mindanao and Visayas had only 21 and 12 additional banking offices, respectively.
Meanwhile, three (3) overseas branches situated in the Asia-pacific region were closed while there was one (1) branch in Europe that opened in 2004. This is due to the robust growth and increasing share to total OFW remittances in the European region in recent years. (Table 3)
The resulting banking density ratio for the whole country remained at 5 banking offices per city/municipality. This currently serves around 10,929 persons for each banking office. The NCR still had the highest concentration of banking office ratio at 155 banks per city with each office serving 4,190 persons. A far second was the CALABRZON with 8 banking offices and serving 8,522 persons. On the other hand, the Autonomous Region of Muslim Mindanao (ARMM) had the lowest banking office per municipality and the largest population density ratio at 89,631 persons. (Table 4)
The continuing challenge for the banking sector include the reduction of borrowing costs and expansion of service delivery channels through the use of non-traditional channels like the increased deployment of information and communications technology (ICT) in order to remain competitive.
Philippine Banking System Number of Domestic & Foreign Banks Engaged in Non-Traditional Banking Services As of end-December 2004
ATM 40 9
Internet 16 11
(Phone/PC-based) 14 3 Non-Mobile
(Cellphones/Laptops/Palm) 13 3 Mobile
Proprietary 6 7
Mobile/Internet via 20 3 Bancnet's/Megalink's Switch
0 5 10 15 20 25 30 35 40 45 50 Domestic Banks Foreign Banks
Source: Office of Supervisory Policy Development, Supervision and Examination Sector 11
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
This trend continued at a stronger pace in 2004 with 20 domestic banks (from only 12 banks in 2003) increasing their use of mobile and internet phone banking services as this service provides enhanced customer convenience round-the-clock. The use of the internet services also expanded to 16 domestic banks (from 12) and 11 foreign banks (from 10) engaging in this service. Meanwhile, the number of banks expanding their services via automated teller machine (ATM) network further increased to 40 domestic banks (from 36 in 2003) and 9 foreign banks (from 7 in 2003). The network of ATMs grew by 19.6 percent to reach 5,469 units across the country in 2004 with all major areas outside NCR posting significant expansion. This brought the total number of banks providing electronic banking services to 60 from only 55 in the previous year. (Table 5)
Philippine Banking System Number of Banks Engaged in Electronic Banking Services As of December 31, 2004
E-Banking E-Banking ATM and ATM TOTAL Only Only Combined
Domestic Banks 4 14 26 44 Private Domestic - UBs - 1 11 12 Private Domestic - KBs 1 1 6 8 Government Banks - - 2 2 Domestic Thrift Banks 3 12 7 22
Foreign Banks 7 2 7 16 Branches of Foreign Banks - UBs - - 2 2 Branches and Subsidiaries of Foreign Banks - KBs 7 2 4 13 Foreign Banks - TBs - - 1 1
RESULTS OF OPERATIONS
The banking system continued to operate profitably in 2004 albeit lower than the 2003 level. Net income after tax (NIAT) for the year reached P35.1 billion, a 12.1 percent decline from the level of P39.9 billion in the same period last year despite the robust growth of net operating income that increased further to 23.0 percent in 2004. The lower NIAT can be partly traced to the higher extraordinary credits posted in 2003 with the reversal of provisioning related to the rehabilitation of a commercial bank. (Table 6) Net of this extraordinary credit, the NIAT for the year would have maintained the growth trend that started in 2001.
Source: Office of Supervisory Policy Development, Supervision and Examination Sector 12
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
Total operating income for the period totaled P189.3 billion, posting a higher growth of 8.7 percent compared to the 2003 expansion of 6.1 percent. The faster growth was on account of the 24.5 percent substantial increase in net interest income to P128.1 billion. Net interest income accounts for 67.8 percent of total operating income.
On the other hand, non-interest income was lower at P61.1 billion, translating to a 14.3 percent decline as a result of lower trading gains amidst steady growth in fee-based, trust department and other incomes. Total fee-based income reached P27.3 billion, up by 12.5 percent over last year with all sub-components posting increases. Trading income was much lower for the year at P15.7 billion or a decline by more than half from last year. This was primarily due to the gradual increase in domestic and international interest rates in 2004 which reduced the relative value or price of debt securities in the market.
Meanwhile, the banking system’s operating expenses amounted to P151.8 billion in 2004, increasing by 5.6 percent from last year despite lower bad debt write-offs/provisions for probable losses. The increase was comparatively higher than the minimal growth of 0.6 percent last year, breaking the downward trend of expenses in the past few years. Overhead costs and other expenses expanded faster due to the increased compensation and benefits of personnel with several banks recently signing new collective bargaining agreements, outlay of automated teller machines (ATMs), expansion of e-banking services and increase in bank branches. Furthermore, expense related taxes increased following the re-imposition of the gross receipts tax and higher occupancy rentals were observed during the period.
The banking sector’s profitability indicators remained at a comfortable level despite slightly lower return on assets (ROA) and return on equity (ROE) data compared to 2003 on account of lower NIAT in 2004. The banking system’s ROA slid to 0.9 percent from the previous year’s 1.1 percent, halting the upward trend that began in 2000. Likewise, banks posted lower ROE of 7.1 percent in 2004 from 8.5 percent last year. Discounting the extraordinary income in 2003, the ROA and ROE of the banking system would have maintained its upward path.
By banking group, cooperative banks continued to be the most profitable since 2001 with an ROA of 2.4 percent and an ROE of 13.8 percent. Meanwhile, thrift banks remained laggards with lowest ROA/ROE ratios.
Source: Office of Supervisory Policy Development, Supervision and Examination Sector 13
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
Philippine Banking System: Return on Assets (ROA)
In Percent 3.00
2.50
2.00
1.50
1.00
0.50
0.00
(0.50) 1998 1999 2000 2001 2002 2003 2004 p/ ALL BANKS Universal Banks Commercial Banks Thrift Banks Rural Banks Cooperative Banks
Philippine Banking System: Return on Equity (ROE)
In Percent
18.00
15.00
12.00
9.00
6.00
3.00
0.00
(3.00) 1998 1999 2000 2001 2002 2003 r/ 2004 p/ ALL BANKS Universal Banks Commercial Banks Thrift Banks Rural Banks Cooperative Banks
r/ Revised p/ Preliminary
Source: Office of Supervisory Policy Development, Supervision and Examination Sector 14
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
Despite the continuing net Philippine Banking System: Cost-to-Income Ratio operating income growth, the banking system as a whole posted a slightly (In P Billions) (In Percent) 175.0 100.0 higher cost efficiency level as seen 90.0 150.0 through the cost-to-income (CTI) ratio. 80.0 This is computed using operating 125.0 70.0 expense exclusive of bad debts and 100.0 60.0 50.0 provisioning as a ratio to total operating 75.0 40.0 income. Foreign banks remained the 50.0 30.0 20.0 most cost-efficient at 62.9 percent albeit 25.0 10.0 higher than the 2003 level of 57.2 percent, 0.0 0.0 1996 1997 1998 1999 2000 2001 2002 2003 2004 followed by private domestic universal Operating Operating Expense Cost to Income (net of bad debt/prov) Income banks (66.8 percent) and private domestic commercial banks (68.6 percent).
Philippine Banking System: Cost-to-Income Ratios
2000 2001 2002 2003 2004 All Banks 81.8 80.7 71.4 68.9 69.8p/ Domestic Banks 84.9 85.9 74.5 71.4 71.1p/ Private Domestic UBs 84.3 90.6 75.5 68.9 66.8 Private Domestic KBs 90.0 85.1 66.1 69.0 68.6 Government Banks 70.4 60.1 63.6 64.9 71.3 Thrift Banks 104.6 112.5 87.1 93.0 94.2 p/ Rural Banks 85.4 85.2 85.8 82.1 80.7 p/ Cooperative Banks 95.5 83.2 83.4 79.5 78.1 p/ Foreign Bank Branches/Subsidiaries 67.8 59.7 57.7 57.2 62.9 Foreign Bank Branches 59.9 53.8 52.2 53.1 58.5 Foreign Bank Subsidiaries 122.9 109.3 103.7 90.7 100.0 p/ Preliminary
The banking sector’s earning asset yield increased to 8.0 percent from 7.4 percent in 2003. This reflected the rising interest rates and improving loan and asset quality in 2004. Its spread over the bellwether 91-day Treasury bill rate narrowed, however, to 70 basis points from 140 basis points as loan demand continued to be sluggish and excess funds were
Source: Office of Supervisory Policy Development, Supervision and Examination Sector 15
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004 invested in government securities in the absence of a faster and wider pace of economic activity.
Philippine Banking System Selected Ratios vs. 91-day Treasury Bill Rate
15.3 15.0 13.8
12.0 14.0 10.9 13.1 10.3 10.2 10.2 9.0 9.9 9.9 7.7 7.4 8.0 5.4 7.3 6.0 8.0 8.5 6.4 6.0 6.1 6.2 3.0 3.8 3.9 3.6 - 1997 1998 1999 2000 2001 2002 2003 2004 Earning Asset Yield T-bills (91-day) Funding Cost
Likewise, funding cost rose to 3.8 percent from 3.6 percent in the previous year. The higher funding cost depicted the healthy expansion in the deposit base such as in time deposits and FCDU accounts, the former serving as an alternative instrument relative to pre- need products and the latter an indication of the healthy inflows of OFW remittances. These developments resulted in a comfortable increase in interest spread of 420 basis points from 380 basis points in 2003.
MAJOR BALANCE SHEET TRENDS
ASSETS. Amid the relatively stable macroeconomic environment, the banking sector’s performance in 2004 increased at a faster pace. Nominal total assets grew by 9.9 percent to P4,023.3 billion compared to the 2003 growth of 5.3 percent. Underlying the asset growth of banks was the continued expansion of its lending and net investment activities that grew by 4.4 percent and 26.1 percent, respectively. These assets comprised majority or around 71.0 percent of the total asset base of the banking system. (Table 8)
Source: Office of Supervisory Policy Development, Supervision and Examination Sector 16
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
Philippine Banking System: Asset Mix
Loans Loans Cash and due (net, exclusive of IBL) 42.1% Cash and due (net, exclusive of IBL) 40.0% from banks from banks 7.8% 8.0%
Other assets Other assets 9.3% IBL 8.6% IBL 6.5% 7.6% ROPOA (net) ROPOA (net) 6.1% 5.9% Investments (Net) 27.1% Investments (Net) 31.0%
P3,661.1 Billion P4,023.3 Billion December 2003 December 2004
By banking industry, Philippine Banking System: Distribution of Assets private domestic commercial banks posted the highest 2004 growth at 19.7 percent, 2003 followed by rural/cooperative 2002 banks and foreign banks with 2001 11.8 percent and 10.8 percent, 2000 respectively. Furthermore, 1999
1998 private domestic universal
1997 banks comprised 57.6 percent of
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% the total asset base of the Private Domestic Universal Banks Foreign Banks banking system followed by Private Domestic Commercial Banks Domestic Thrift Banks Government Banks Rural/Cooperative Banks foreign banks with 13.8 percent and government banks with 11.1 percent. The share of foreign banks (branches and subsidiaries) to the total assets of the banking system was less than half the maximum 30 percent limit prescribed under Section 3 of R.A. No. 7721 (An Act Liberalizing the Entry and Scope of Operations of Foreign Banks in the Philippines).
Source: Office of Supervisory Policy Development, Supervision and Examination Sector 17
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
The total loan portfolio (TLP) of the banking system as of end-December 2004 amounted to P2,030.7 billion or a growth of 2.4 percent from P1,982.3 billion in 2003. Excluding interbank loans (IBL), TLP reached P1,769.8 billion or a 4.0 percent growth over 2003. This was slightly above the 3.7 percent loan expansion posted last year. IBL stood at P260.9 billion, a decline of 6.8 percent from the P280.0 billion level in 2003 and represented 12.8 percent of TLP (down from 14.1 percent last year).
Loans directed to the Manufacturing sector still led the overall trend of bank lending with a growth of 14.1 percent from last year to reach P440.3 billion and cornering more than a fifth of the total loan portfolio of the banking system. This was a turnaround from the previous year’s negative growth of 2.6 percent. Other sectors that have taken advantage of loans extended by the banking sector include Agriculture, Fishery, Hunting and Forestry (P16.4 billion or a 14.6 percent growth); Utilities (P13.1 billion or a 20.1 percent growth); Wholesale and Retail Trade, and Repair of Motor Vehicles (P5.9 billion or a 2.3 percent growth); and Hotels and Restaurants (P1.6 billion or a 9.0 percent growth).
Philippine Banking System: Loan Portfolio Structure By Industry Sector Amount in P Billion As of end-December 2004 P2,030.7 100.0% Manufacturing P440.3 21.7% 8.2% 8.4% Real Estate, Construction, Renting & P297.3 14.6% 6.3% Business Activities 4.1% 12.7% Interbank Loans 3.9% P260.9 12.8% Wholesale, Retail Trade & Repair of P258.74 12.7% 7.3% Motor Vehicles Other Community, Social & P171.0 8.4% 12.8% Personal Service Activities
Financial Intermediation P165.6 8.2%
21.7% Agriculture, Fishery, Hunting & Forestry P128.7 6.3% 14.6% Transportation, Storage & Communication 82.4 4.1%
Electricity, Gas & Water P 78.6 3.9% Others P147.2 7.3%
Source: Office of Supervisory Policy Development, Supervision and Examination Sector 18
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
Meanwhile, consumer loans in the form of housing and automobile loans, and credit card receivables maintained its growth at 12.3 percent in 2004. The slowing trend in recent years was an outcome of the BSP’s implementation of a more stringent policy on credit card operation, particularly in the customer application process and developments in the automobile industry. These two sub-sectors equally accounted for 59.0 percent of total consumer loans.
With more stringent loan procedures, the growth of credit card receivables significantly slowed down from its peak of 41.2 percent in 2002 to 16.1 percent in 2004. Improvements in loan quality were noted that should ensure sustainable operations in the future and prevent potential problems that may be detrimental to the financial system. The past due level declined by 2.6 percent which was around 0.5 percent of TLP.
The rationalization of the tax structure in the automobile industry affected loan growth since majority of the financing plans are through banks. Automobile sales posted marked shifts in purchases of previously tax-exempt vehicles and potential buyers factoring higher oil prices.
By bank industry, these are niche markets for certain types of banks in the system. Foreign banks accounted for 69.5 percent of the credit card market followed by a 24.6 percent share from domestic private universal banks. For automobile loans, these are the niche markets of domestic thrift banks that cornered 71.7 percent of the total market.
Notwithstanding this trend, housing loans of banks remained on an upward path since 2002. Loan growth in 2004 reached 13.8 percent compared to 10.6 percent posted in the previous year. The growing demand for residential housing is supported by the strong inflows of OFW incomes and the competitively low interest rates being offered by banks. Furthermore, this has been complemented by various activities undertaken by banks to unload their non-performing assets at more reasonable prices.
Nevertheless, the overall lending performance of the banking system remained moderate as a result of several factors that included excess capacity in key industries, particularly manufacturing, and the slow growth being experienced in certain sectors of the economy thereby depressing the need for credit to expand capacity. Furthermore, heightened uncertainties prior to the conduct of the national elections in early 2004 and expectations of slower economic growth made firms and businesses wary of expanding their current production capacity and thus translating into lackluster corporate loan growth.
Source: Office of Supervisory Policy Development, Supervision and Examination Sector 19
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
BSP Business Expectations Survey Diffusion Index: 2002 Q4 to 2005
In Percent
60 80 50 CapUt (right 78 Current (left 40 Next Qtr (left 76 74 30 72 20 70 10 68 0 66 -10 64 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2002 2003 2004 2005
Source: Department of Economic Research, BSP Based on the BSP Business Expectations Survey, current quarter business outlook prior to the May 2004 elections declined due to growing political uncertainties. Confidence was further weakened with initial perceptions that the government will not be able to meet its fiscal discipline objective leading to instability in the price environment and thereby translate to lower growth of the economy. With the peaceful and orderly conduct of the national elections, business sentiments rebounded for both the current and next quarter outlook in the latter half of 2004. Meanwhile, recent surveys conducted indicate a brighter outlook for the first half of 2005 with the absence of political uncertainties and a more stable macroeconomic environment.
The benign credit conditions also mirror the current structural situation of the banking sector as it continues to be saddled with a pool of non-performing assets (NPAs) that weigh down on increasing lending capacity. Banks have been reluctant in disposing their NPAs despite the enactment of the Special Purpose Vehicle (SPV) Act of 2002 on account of the steep discounts that SPVs demand that can reach up 70 to 80 percent. The steady recovery of the real estate sector and increasing OFW incomes in recent years have encouraged banks to sell their real and other properties owned and acquired (ROPOA) to individuals via advertising and extension of medium- and long-term financing. Other banks have also opted to develop acquired properties either through joint ventures or tapping the expertise of their real estate firm subsidiaries. For their non-performing loans (NPLs), banks have mostly intensified collection efforts and pursued traditional solutions such as restructuring, rehabilitation and foreclosures.
Source: Office of Supervisory Policy Development, Supervision and Examination Sector 20
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
The thrust of the BSP in strengthening prudential regulations over banks, particularly its major reform initiative of fully shifting to a risk-based capital adequacy framework has made banks more cautious and risk averse in their lending activity. However, this has made banks become more focused, targeted and better organized in their lending business over the past periods. Coupled with increasing competition in the lending market, banks have concentrated on different market niches such as focusing on top-tier or middle-income corporations and in consumer finance underscoring primary types of needs such as automobile and housing loans, and credit cards to increase their profits.
Another factor that explains moderate loan growth amid the strong economic expansion in recent periods is the wider options faced by companies to fund their investment and expenditure activities from internal sources such as borrowing from their respective parent company or subsidiary group. The capital market and non-bank lenders have also been an alternative to bank’s intermediation business in extending funding needs of corporations. Furthermore, local corporations have also engaged in strategic partnerships with established global firms such as in the case of some telecommunication players and large food manufacturers to finance their investments and expansions. Others have tapped the international bond market where world interest rates were benign prior to the recent interest rate increases by US monetary authorities.
Investments, net increased by 28.3 percent to P1,249.0 billion from P990.5 billion last year. A substantial P98.4 billion or 92.1 percent of the investments were in fixed income securities. The increased competition and relative sluggishness in the lending environment prompted banks to channel their resources to fixed-income instruments of the government since they provide favorable market returns and are risk-free. Moreover, fiscal deficits incurred by the government since 1998 have piled on debt that substantially increased its debt servicing requirements in recent periods.
Philippine Banking System: ROP Global Bond Spreads
In Basis Points ROP Global Bond Spreads (In basis points) 900 800 Phil'08 Phil '10 700 Phil '19 Phil '25 600 500 400 300 200 100 1/2/2001 1/2/2002 1/2/2003 1/2/2004 1/2/2005
Source: Bloomberg
Source: Office of Supervisory Policy Development, Supervision and Examination Sector 21
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
Meanwhile, the proportion of banks’ funding was primarily sourced from deposit accounts. Total deposits rose by 12.0 percent to P2,766.4 billion in 2004 (vs. 4.9 percent in 2003). The strong expansion was mainly attributed to the surge in peso time deposits that grew by 87.1 percent and foreign currency deposits that increased by 16.9 percent. Major contributors of growth were the private universal banks at P143.4 billion, trailed by foreign banks (branches and subsidiaries) at P59.7 billion and by the private domestic commercial banks at P33.3 billion. Private domestic universal banks had the biggest deposit base at P1,662.6 billion or 60.1 percent of the total. This was followed by foreign banks (branches and subsidiaries) at P356.9 billion or 12.9 percent, government banks at P251.8 billion or 9.1 percent and private domestic commercial banks at P208.3 billion or 7.5 percent.
The robust expansion of time deposits can be traced to higher OFW remittances owing to higher returns associated with the weakening of the country’s currency relative to the US dollar as well as client shift from the pre-need industry. Meanwhile, local currency savings deposits remained the core deposit base accounting for 44.8 percent of total deposit liabilities of banks. However, this slightly declined by –0.5 percent over 2003.
The deposit mix as of end-year 2004 remained concentrated on demand/NOW and savings deposits that comprised 74.6 percent of the total deposit liabilities, down from 78.7 percent in 2003. With strong growth, share of time deposits increased to 25.4 percent from the previous year’s 21.3 percent. Meanwhile, majority of the deposit liabilities was in local currency at 67.9 percent (down from 69.3 percent) and the remaining share in foreign currency accounts at 32.1 percent (up from 30.7 percent).
Philippine Banking System: Deposit Mix
PESO DEPOSITS FOREIGN CURRENCY DEPOSITS
December 2003 December 2004 December 2003 December 2004
9.5% 16.3%
33.5% 32.1%
90.5% 83.7%
66.5% 67.9%
P1,709.9 Billion P1,878.6 Billion P759.2 Billion P887.8 Billion
Demand/NOW & Savings Deposits Time Deposits
Source: Office of Supervisory Policy Development, Supervision and Examination Sector 22
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
In 2004, assets financed via bills payable amounted to P386.5 billion, growing at a slower rate of 1.4 percent (vs. 6.7 percent last year). Bills payable of domestic banks comprised majority of this at 85.6 percent.
The banking system responded favorably to BSP initiatives in encouraging long-term funding for their capitalization needs. Unsecured subordinated debt issued for the year increased by a strong 46.2 percent to P51.4 billion in 2004.
Philippine Banking System: Funding Mix
Deposits 67.4% Deposits 68.8% Bills Payable 10.4% Bills Payable 9.6%
Other Liabilities Other Liabilities 8.1% 7.7%
Capital Accounts Capital Accounts 12.6% Unsecured Subordinated Debt 13.1% Unsecured Subordinated Debt 1.0% 1.3% P3,661.1 Billion P4,023.3 Billion December 2003 December 2004
The combined capital accounts of the banking system amounted to P505.9 billion, a 5.5 percent increase from last year’s P479.4 billion, of which 71.9 percent or P363.8 billion came from private domestic universal and commercial banks. Capital accounts consisted primarily of paid-up capital at 44.8 percent, slightly down from 45.7 percent last year. Surplus, surplus reserves and other profits made up 40.8 percent, down from 41.7 percent with lower income retained. The remaining balance of 14.4 percent represented the assigned capital and net due to head offices of foreign bank branches.
LOAN AND ASSET QUALITY. The continued settlement of loans through foreclosure of mortgages, the bulk sales of bad assets in the last quarter of the year and the modest loan growth translated to an improvement in the non-performing loans (NPLs) ratio of the banking sector in 2004. The NPL ratio stood at 12.5 percent as of end-2004, an improvement from the 13.8 percent ratio at end-2003 as NPLs fell by 6.8 percent to P252.9 billion. Likewise, total non-performing assets (NPAs) to gross assets ratio declined to 11.8 percent from last year’s 13.2 percent as NPAs declined by 1.3 percent to P495.6 billion. Furthermore, the banking sector’s distressed assets ratio further dipped to 25.3 percent from
Source: Office of Supervisory Policy Development, Supervision and Examination Sector 23
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
27.0 percent last year. The expansion of the banking system’s loan portfolio led to the improvement in the NPL, NPA and distressed assets ratios for the year. (Table 8)
NPLs and NPL Coverage Ratio
In P Billion In Percent 350 70 300 60
250 50 200 40 150 30 100 20 50 10
0 0 1998 1999 2000 2001 2002 2003 2004
NPLs Loan Loss NPL Ratio NPL Coverage Reserves Ratio
The recent flurry of activity with regard to the disposal of banking system’s non- performing assets was due largely to the winding down of time-bound provisions of the SPV Law. With the deadline of incorporation of SPVs in the latter part of 2004, a total of 36 corporations registered with the Philippine Securities and Exchange Commission (SEC) with 16 SPVs established by ten banks. As of end-year 2004, the BSP issued a total of 121 certificates of eligibility (COE) which qualify for exemption from certain taxes and reduction on fees associated with the normal sale or transfer of these assets.
NPAs and NPA Coverage Ratio
In P Billion In Percent
600 50
500 40 400 30 300 20 200
100 10
0 0 1998 1999 2000 2001 2002 2003 2004
NPAs NPA NPA Ratio NPA Coverage Reserves Ratio
Source: Office of Supervisory Policy Development, Supervision and Examination Sector 24
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
As of end-December 2004, P26.2 billion worth of bad assets were transferred involving various transactions via SPVs. Meanwhile, P53.8 billion worth of bad assets have pending applications for COE approval, which will put the total transfer of bad assets to SPVs at P80.0 billion, about 16.0 percent of the total NPAs.
The initial and subsequent bulk sale of bad assets to SPVs in the last quarter of 2004 contributed to the faster pace of disposal of NPAs which resulted in an improved NPL and NPA coverage ratios for 2004 to 58.0 percent (from 51.5 percent) and 33.2 percent (from 30.9 percent), respectively. Loan loss reserves increased by 4.9 percent to P146.7 billion while allowance for probable losses on NPAs increased by 6.1 percent to P164.6 billion. The increased pace of financial restructuring bodes well for the banking industry as it can significantly bolster the current momentum of growth and development in the economy.
On a broader measure of asset quality, the distressed assets ratio also improved to 25.3 percent from 27.0 percent last year. This developed as the 3.1 percent reduction in distressed assets was complemented by the 3.2 percent rise in TLP plus ROPOA. Although restructured loans declined by 7.5 percent in 2004, the trend for the two consecutive years showed the ratio of non-performing restructured loans to total restructured loans increased to 46.7 percent, from 39.9 percent at end-year 2003 and 36.8 percent at end-year 2002.
Distressed Assets Level/Ratio
In P Billion In Percent 600 50 500 40 400 30 300 20 200 100 10 0 0 1998 1999 2000 2001 2002 2003 2004
NPAs Restructured Loans Distressed Assets Ratio (current)
Source: Office of Supervisory Policy Development, Supervision and Examination Sector 25
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
LIQUIDITY. Liquidity ratios continue to reflect the changing asset mix of the banking system. Liquid assets to deposits ratio increased to 53.2 percent in 2004 from the previous 47.9 percent. This was mainly due to the surge in investments, net, particularly the purchase of government securities. In end-year 2004, liquid assets consisted of cash and due from banks at P320.0 billion or a 12.2 percent growth compared to 2003 and investments, net (exclusive of equity) at P1,249.0 billion or an increase of 26.1 percent over last year. Loans (gross) to deposits declined to 73.4 percent from 80.3 percent as deposit growth substantially overtook the moderate increase in lending. Meanwhile, cash and due from banks to deposits ratio was almost unchanged at 11.6 percent.
CAPITAL ADEQUACY. The banking system remained adequately capitalized with solvency ratios higher than the minimum regulatory standard set by the BSP (10 percent benchmark) and above international norm (8 percent benchmark) as of end-June 2004. On a solo basis, total qualifying capital (Tier 1 and Tier 2 less deductions) amounted to P373.4 billion representing 17.0 percent of risk-adjusted assets. Likewise on a consolidated basis, CAR was at 18.3 percent, an improvement from the 17.4 percent posted as of end-December 2003. The increase in CAR levels in 2004 was a result of higher Tier 2 capital, particularly through the issuances of eligible unsecured subordinated debt by private domestic universal banks. Although the industry’s recorded CAR exceeded prescribed regulatory ceilings, the high volume of NPAs amounting to about half a trillion pesos threatened banks’ solvency.
Philippine Banking System: Capital Adequacy Ratio (CAR)
Solo1/ Consolidated 1/
End-December End-June End-December End-June 2004 2004 2002 2003 2002 2003
(In P Billion) Tier 1 339.8 353.9 373.0 340.9 349.1 366.7
Tier 2 44.6 69.0 74.3 46.0 69.8 75.3 Deductions 66.3 74.3 73.9 18.2 12.8 12.3 Qualifying Capital 318.1 348.6 373.4 368.7 406.1 429.7 Risk Weighted Assets (RWA) - net 2,048.4 2,179.2 2,201.7 2,186.2 2,328.1 2,348.9
(In Percent) Capital Adequacy Ratio 15.5 16.0 17.0 16.9 17.4 18.3
1/ 31 December 2002, based on the latest regular examination reports of 764 rural and cooperative banks; and 31 December 2003, based on the latest regular examination reports of 770 rural and cooperative banks as of 30 June 2003.
Source: Office of Supervisory Policy Development, Supervision and Examination Sector 26
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
The growth of the banking system’s capital accounts has also translated to improved compliance among the different types of banks. Overall, the number of banks that complied with the prescribed minimum amount of capital reached 706 or 79.1 percent of all banks. Compliance by bank type were as follows:
a. universal and commercial banks – 33 banks or 78.6 percent (vs. 34 banks or 80.9 percent in 2003);
b. thrift banks – 56 banks or 64.4 percent (vs. 58 banks or 63 percent in 2003);
c. rural and cooperative banks – 617 or 80.8 percent (vs. 608 banks or 79.5 percent in 2003).
Status of Banks' Compliance with Prescribed Minimum Amount of Capital
2000 2001 2002 2003 2004
A. Number of Operating Banks 947 929 912 899 893
Universal and Commercial Banks 45 44 42 42 42 Thrift Banks 112 104 94 92 87 Rural/Cooperative Banks 790 781 776 765 764
B.xxBanks with Capital Equal to or in Excess of 709 703 708 700 706 B.xxthe Minimum Amount Required
Universal and Commercial Banks 35 36 35 34 33 Thrift Banks 73 67 57 58 56 Rural/Cooperative Banks 601 600 616 608 617
Source: Office of Supervisory Policy Development, Supervision and Examination Sector 27
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
OFF-BALANCE SHEET ACTIVITIES
The country’s slower trade performance in 2004 was reflected by the slight 2.3 percent growth in trade-related off-balance sheet activities to reach P45.4 billion after growing by 9.3 percent in 2003. The slack in the trade-related activities maybe attributed to low global demand for semi-conductor’s and electronics, which accounts for around 60.0 percent of the country’s exports.
Meanwhile, total bank guarantees reached P105.7 billion or a decline of 5.7 percent from the previous year. The decline was largely attributed to lower outstanding guarantees issued by banks that posted a 10.1 percent decrease from 2003. On the other hand, stand-by letters of credit grew by a nominal 0.7 percent.
Nominal amount of derivatives contracts also posted a decline of 16.2 percent to reach P1,012.2 billion in 2004 as financial options substantially dropped to P19.8 billion or by 93.9 percent from the P321.5 billion in 2003. However, upon a closer look there are positive developments that point to an increasing use of interest rate derivatives products such as swaps and forwards. Interest rate swaps increased by a sizeable rate of 52.3 percent to reach P197.5 billion while interest rate forwards were again in use after being dormant for a couple of years.
Source: Office of Supervisory Policy Development, Supervision and Examination Sector 28
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
UNIVERSAL AND COMMERCIAL BANKS
OVERVIEW
The generally improved economic conditions during the year fostered a healthier balance sheet and stronger capital position for the universal and commercial banking industry. The slew of positive news in the industry was highlighted by events leading up to the incorporation deadline of SPVs, the inception of a timetable for the new international banking rulebook known as Basel II, reforms in the trust business particularly the launching of the Unit Investment Trust Fund (UITF), and initiatives to further develop the domestic capital market through the establishment of third party securities custodian, among others.
Stirred by the incentives of the SPV Law which included tax perks and lower transaction fees, the industry reduced its holdings of bad loans. The initial bulk sale to SPVs in November 2004 is expected to speed up the transfer of substantial non-earning assets of the industry. As of end-year 2004, non-performing loans (NPLs) declined by 7.5 percent to P227.0 billion from last year’s P245.5 billion. Complemented by the 2.1 percent growth in total loan portfolio to P1,784.2 billion, the NPL ratio consequently improved to 12.7 percent from 14.1 percent. Moreover, the reduction in bad loans triggered a 2.7 percent drop in non-performing assets (NPAs) to P430.4 billion from P442.3 billion. Simultaneous with a 9.6 percent growth in gross assets, the NPA ratio posted its lowest in five years at 11.4 percent. The resultant decline in NPL and NPA ratio, however, leaves more room for improvement in terms of asset quality.
The industry remained solvent as capital adequacy ratio (CAR) as of end-June 2004 rose to 16.9 percent from 15.7 percent as of end-December 2003. Consolidated CAR likewise strengthened to 18.4 percent from 17.3 percent. Both solo and consolidated CARs were well above the 10 percent minimum benchmark.
Notwithstanding the preceding positive developments, the industry’s profitability weakened, mainly due to the significant reduction in extraordinary credits. Bottom line figure fell by 13.9 percent to P33.3 billion after peaking at P38.7 billion as of end-year 2003. Consequently, return on assets (ROA) and return on equity (ROE) broke its uptrend from end- 2000 to end-2003, settling at 1.0 percent and 7.6 percent, respectively.
On a positive note, net operating income remained on an uphill trek, increasing by 23.0 percent to P36.6 billion from last year’s P29.8 billion. Revenues from the industry’s core business of lending and from investments of excess funds in government debt instruments
Source: Office of Supervisory Policy Development, Supervision and Examination Sector 29
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004 reached a double-digit growth boosting returns and cushioning the effect of a slight increment in operating expenses.
Universal and Commercial Banking System Buoyed up by the substantial Market Structure of Assets growth in deposits and capital accounts 2004 of 11.9 percent and 6.3 percent,
2003 respectively, total assets recorded a
2002 growth rate of 9.7 percent to P3,617.6
2001 billion from end-year 2003’s P3,297.2
2000 billion. (Table 9) Main drivers of
1999 growth were the corresponding growth
1998 in private domestic commercial banks
1997 and foreign banks (branches and
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% subsidiaries) which posted year-on- year increases of 19.7 percent and 10.4
Private Domestic - UBs Government Banks percent, respectively. Whereas, private
Private Domestic - KBs Foreign Banks (Branches & domestic universal banks and Subsidiaries) government banks also contributed to the industry’s improving assets by 8.8 percent and 7.2 percent, respectively. Nonetheless, private domestic universal banks remained dominant with a sizeable share of 64.0 percent (down from last year’s 64.5 percent). Foreign banks (branches and subsidiaries) followed with a share of 15.1 percent (up from 15.0 percent). Government banks and private domestic commercial banks took up 12.3 percent (down from 12.6 percent) and 8.6 percent (up from 7.9 percent), respectively.
The share of investments in government securities continued to build-up on liquid assets at 51.0 percent (from last year’s 45.9 percent). The hefty growth in non-equity investments by 28.3 percent drove liquid assets by 24.8 percent to P1,364.6 billion from last year’s P1,093.2 billion. This brought up liquid asset to deposits ratio to 55.2 percent from 49.5 percent as of end-December 2003. (Table 10)
Based on their published statement of condition as of 20 December 2004, Metrobank maintained its lead in terms of assets, loans (gross) and deposits. However, BPI overtook Metrobank for the number one slot in terms of capital accounts at P55.0 billion. Meanwhile, Citibank dislodged PNB and DBP from the roster of top five universal and commercial banks in terms of assets and loans, respectively.
The top 5 universal and commercial banks held majority of the industry’s aggregate assets, loans (gross), deposits, and capital accounts at 46.4 percent (down from last year’s 47.3 percent), 44.5 percent (up from last year’s 35.8 percent), 49.7 percent (down from last year’s 51.6 percent) and 44.0 percent (down from last year’s 45.4 percent), respectively. (See Top 5 table on the next page)
Source: Office of Supervisory Policy Development, Supervision and Examination Sector 30
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
Top Five Universal and Commercial Banks
Based on Published Statements as of 20 December 2004 (Amounts in P Billion) Assets Loans
Rank Name of Bank Amount Rank Name of Bank Amount 1 Metrobank 470.6 1 Metrobank 242.7 2 BPI 394.8 2 BPI 162.2 3 Equitable PCI Bank 293.5 3 Equitable PCI Bank 134.2 4 Landbank 291.0 4 Citibank 130.4
5 Citibank 229.0 5 Landbank 130.3 Total 1,678.9 Total 799.8 % Share 46.4 % Share 44.5 Deposits Capital Accounts
Rank Name of Bank Amount Rank Name of Bank Amount 1 Metrobank 345.7 1 BPI 55.0 2 BPI 314.7 2 Metrobank 53.4 3 Landbank 216.4 3 Equitable PCI Bank 44.4
4 Equitable PCI Bank 189.6 4 PNB 24.0 5 PNB 163.5 5 Landbank 21.2 Total 1,229.9 Total 198.0 % Share 49.7 % Share 44.0
OPERATING NETWORK
As of end-December 2004, the total number of head offices, branches and other offices of the universal and commercial banking industry expanded by 33 to 4,329 from 4,296 last year. (Table 11) Of the total, there were 42 head offices and 4,287 branches and other offices. The additional banking offices were mainly reopened branches/other offices of merged/consolidated banks.
As in the previous year, there were 18 universal banks composed of 12 private domestic banks, 3 government banks and 3 foreign bank branches. On the other hand, there were 24 commercial banks which consisted of 9 private domestic banks (from 8 last year), 4 subsidiaries of foreign banks (from 5 last year), and 11 branches of foreign banks. (Schedule 1)
The additional 33 branches and other offices resulted from the reopening of 92 branches as well as the closure of 59 branches during the year. This included the closure of 3 overseas branches in the Asia Pacific region while establishing a new branch in Europe. This brought to 48 the total overseas network as of end-year 2004 from last year’s 50. Domestic branching operations remained concentrated in the National Capital Region (NCR) at 47.2
Source: Office of Supervisory Policy Development, Supervision and Examination Sector 31
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004 percent of the total number of domestic branches/other offices, slightly down from last year’s 47.7 percent. The CALABARZON followed at 10.5 percent, while the remaining regions held less than 10.0 percent each. It was only in Southern Mindanao (Region XI) where a net reduction of branches/other offices was recorded. (Table 11)
Automated Teller Machines (ATMs) operations further expanded during the year, supplementing banking service delivery of the industry. ATMs rose by 759 (553 on-site and 206 off-site) to 5,100 units as of end-year 2004 from 4,341 as of end-year 2003. With the rise in the number of branches/other offices, units installed within bank premises increased to 3,684 or 72.2 percent of the total ATMs of the industry. Off-site ATMs likewise grew to 1,416 units, 27.8 percent of the total. ATMs remained clustered in the NCR, CALABARZON, Central Visayas and Central Luzon at 49.9 percent, 13.5 percent, 7.0 percent and 6.9 percent, respectively. (Table 12)
At end-December 2004, three new universal and commercial banks engaged in electronic banking were added to last year’s roster of 30 banks. Services offered include fund transfer, loan and credit application, check order and bills payment. Twenty-six (26) banks (from 25 last year) operated their own telephone- and computer-based infrastructures. In addition, 17 banks (from 11 last year) tied up with BancNet’s Multi-Channel Payment Gateway (MCPG) or MegaLink’s ATM Switch networks for internet/mobile banking. Moreover, 8 banks (from 5 last year) participated in the Bureau of Internal Revenue’s Electronic Filing and Payment System (EFPS), a technology that facilitates big time taxpayers to file and pay their taxes electronically. (Table 13)
RESULTS OF OPERATIONS
Propelled by higher yields in its core interest-based business and moderate expansion in lendings and investments in government securities, the industry’s operating income rose by 8.3 percent to P163.8 billion from 2003’s P151.2 billion. This transpired on the back of a double-digit expansion in net interest income by 26.6 percent to P109.4 billion, notwithstanding the significant downturn in non-interest income by 16.0 percent to P54.4 billion. Meanwhile, the network expansion undertaken by the industry in 2004 increased the operating expenses by 4.7 percent to P127.2 billion despite the sizeable 18.0 percent reduction in provisioning for probable losses and bad debts. Nevertheless, net operating income sustained double-digit expansion by 23.0 percent to P36.6 billion. Net income after tax (NIAT), however, was down by 13.9 percent to P33.3 billion as extraordinary credits contracted by a hefty 65.9 percent to P6.1 billion. (Table 14).
The substantial drop in extraordinary credits transpired following a soaring growth of 237.4 percent in 2003 on account of a private domestic UB’s reversal of prior year’s loan loss provisioning associated with specific loans purchased by the Philippine Deposit Insurance Corporation (PDIC) as part of the former’s rehabilitation plan. Excluding said one-time
Source: Office of Supervisory Policy Development, Supervision and Examination Sector 32
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004 transaction, the industry would have posted no more than a 38.6 percent decline in extraordinary credits in 2004.
Revenues from the core business of lending and from investments in government debt instruments showed substantial gains as net interest income posted a double-digit growth of 26.6 percent to P109.4 billion largely due to ascending average interest rates and the level expansion in lending and investments in 2004. Consequently, net interest income contributed to 66.8 percent of the industry’s total operating income, a 9.7 percentage points increment from 57.1 percent in 2003.
Meantime, the industry’s thrust to venture into other revenue generating activities continue to gain ground with fee-based income rising to 12.3 percent to P22.7 billion from P20.2 billion last year. Likewise, improvement in other income and trust department income carried on with a 44.0 percent and a 7.0 percent growth, respectively.
Meanwhile, trading income posted a substantial 52.4 percent decline to P15.3 billion from P32.0 billion principally on account of rising interest rates. This aberration dragged down the industry’s non-interest income in 2004. There was a predominant slump in trading income particularly from government and private securities which plunged by 63.5 percent or P10.0 billion and 55.1 percent or P1.7 billion, respectively. Trading in derivatives likewise plummeted by 174.3 percent or P2.4 billion, posting a loss of P1.0 billion against last year’s gain of P1.4 billion.
Universal and Commercial Banking System: Selected Ratios vs. 91- day Treasury Bill
(In Percent)
18.0 16.0 15.3 14.0 13.3 12.0 13.5 10.5 13.1 9.9 9.9 10.0 7.2 7.5 8.0 10.2 9.9 9.7 6.9 6.0 7.6 8.1 5.4 7.3 4.0 6.1 5.9 6.0 6.0 2.0 3.7 3.5 3.6 0.0 1997 1998 1999 2000 2001 2002 2003 2004 Earning Asset Yield Funding Cost Treasury Bill Rate (91-day)
The average earning asset yield went up by 0.6 percentage point to 7.5 percent from 6.9 percent in 2003. This was reflective of higher lending rates and inroads made to improve loan quality. However, significant investments were still placed in government securities, allowing the 91-day Treasury bill (T-bill) rate at 7.3 percent to close-in the gap against the average earning assets yield to only 0.2 percentage point (from 0.9 percentage point in 2003). Meanwhile, average funding cost inched up to 3.6 percent from 3.5 percent as core deposits remained in non-interest sensitive demand/NOW savings deposits. All told, average interest spread rose by 0.5 percentage point to 3.9 percent, still 1.8 percentage points lower than the 5.7 percent posted in 1997, the onset of the regional crisis.
Source: Office of Supervisory Policy Development, Supervision and Examination Sector 33
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
Universal and Commercial Banking System Industry efficiency suffered a Cost-to-Income Ratio slight set-back as cost-to-income (CTI) (In P Billions) (In Percent) ratio went up to 66.7 percent on the back 175.0 100.0 of faster growth in operating expenses 150.0 80.0 125.0 (net of bad debts and loss provisions) by
100.0 60.0 9.7 percent versus the 8.3 percent gain in 75.0 operating income compared to the 2003 40.0 50.0 ratios. This transpired following the three 25.0 20.0 consecutive years of steady improvement 1997 1998 1999 2000 2001 2002 2003 2004 in the industry’s CTI ratio declining to Operating Operating Expense Cost to Income (net of bad debt/prov) Income 77.3 percent in 2001 to a low 65.8 percent in 2003. The industry is still a far 10.5 percentage points higher than the pre-crisis CTI ratio of 56.2 percent.
Private domestic universal and Universal and Commercial Banking System commercial banks both posted improving Comparative Cost-to-Income Ratio CTI ratios of 66.8 percent and 68.6 (In Percent) 100.0 percent, respectively. On the other hand, government banks chalked up the highest 80.0 CTI ratio among the subgroups at 71.3 percent, a sharp rise of 6.3 percentage 60.0 points from last year. Foreign banks (branches and subsidiaries) remained the 40.0 most efficient despite rising by 5.2 1997 1998 1999 2000 2001 2002 2003 2004 percentage points to 61.7 percent during Universal and Commercial Banks Private Domestic - UBs the year. Moreover, foreign banks Private Domestic - KBs (branches and subsidiaries) recorded Government Banks Foreign Bank Branches & Subs below industry CTI ratio for the sixth consecutive year.
Overall, lower NIAT reduced Universal and Commercial Banking System Comparative Return on Assets (ROA) industry ROA to 1.0 percent from 1.2 (In Percent) percent in 2003. Foreign banks (branches 2.0 and subsidiaries) continued to post the 1.5 highest ROA in five consecutive years 1.0 despite a cut of 1.3 percent from last 0.5 year’s 1.7 percent. On the other hand, 0.0 private domestic universal banks
-0.5 maintained the lowest ROA among the 1997 1998 1999 2000 2001 2002 2003 2004 four subgroups, dropping to 0.9 percent Universal and Commercial Banks Private Domestic - UBs from last year’s 1.2 percent. Government Private Domestic - KBs Government Banks banks and private domestic commercial Foreign Bank Branches & Subs banks gained higher ROAs at 1.1 percent and 1.0 percent, respectively, from last year’s 0.9 percent and 0.8 percent.
Source: Office of Supervisory Policy Development, Supervision and Examination Sector 34
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
The industry’s ROE likewise Universal and Commercial Banking System dropped by 1.7 percentage points to 7.6 Return on Assets (ROA) and Return on Equity (ROE) percent from 2003’s 9.3 percent. (In Percent) 15.0 Nonetheless, ROE continued to float 13.0 above the industry’s ROA. Moreover, 11.0 9.0 the industry has not yet recouped pre- 7.0 crisis ROE and ROA ratios of 13.4 5.0 3.0 percent and 1.8 percent, respectively. 1.0 (1.0) 1997 1998 1999 2000 2001 2002 2003 2004 Major movers of the industry’s ROE were the foreign banks (branches Return on Assets (ROA) Return on Equity (ROE) and subsidiaries) and private domestic universal banks which dropped by 2.9 percentage points and 2.3 percentage points, respectively. On the other hand, the Universal and Commercial Banking System 2.0 percentage points and 1.5 Comparative Return on Equity (ROE) (In Percent) percentage points uptick by private 12.0 domestic commercial banks and 10.0 government banks failed to propel 8.0 the industry’s ROE. Consequently, 6.0 government banks snatched the top 4.0 slot from foreign banks (branches and 2.0 subsidiaries) with the highest ROE at 0.0 11.1 percent. Both subgroups (2.0) 1997 1998 1999 2000 2001 2002 2003 2004 maintained above industry average Universal and Commercial Banks ROE. Whereas, private domestic Private Domestic - UBs Private Domestic - KBs universal banks was at the bottom Government Banks Foreign Bank Branches and Subsidiaries with a below industry average ROE of 6.9 percent.
MAJOR BALANCE SHEET TRENDS
ASSETS. The universal and Universal and Commercial Banking System: Asset Growth commercial banking industry’s In P Billion In Percent 4,000.0 34.5% aggregate assets expanded by 9.7 3,618 3,500.0 29.5% 3,297 percent to P3,617.6 billion from end- 3,141 24.5% 3,000.0 2,936 2,943 year 2003’s P3,297.2 billion, the highest 2,680 2,509 2,501 19.5% 2,500.0 growth after the regional crisis in 1997. 9.6% 32.9 % 9.7 % 14.5% (0.3 %) 2,000.0 6.8 % 7.1% 5.0 % 9.5% 0.2 % The overall expansion in the 1,500.0 4.5% industry’s aggregate assets took place 1,000.0 (0.5%) 1997 19987.1 1999 % 2000 2001 2002 2003 2004 notwithstanding the decline in 9.6 % Levels Growth interbank loans of 7.0 percent. Investments, net and cash and due from banks remained the main drivers of growth with year-on-year expansion of 26.0 percent and 12.7 percent, respectively. Whereas, loans, net (exclusive of interbank loans) and real and other properties owned or acquired, net (ROPOA)
Source: Office of Supervisory Policy Development, Supervision and Examination Sector 35
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004 inched up by 3.7 percent and 3.5 percent, respectively. Finally, other assets lagged behind with a 2.3 percent increment.
Although down by 2.2 percentage points from last year, loans, net (exclusive of interbank loans) still held the biggest share of the industry’s total assets at 38.5 percent. Funds were channeled to investments, net at 32.8 percent, up from 28.6 percent last year. The rest consisted of other assets at 8.7 percent (down from 9.3 percent), cash and due from banks at 7.6 percent (slightly up from 7.4 percent), interbank loans at 7.0 percent (down from 8.3 percent) and ROPOA, net at 5.4 percent (down from 5.7 percent). Universal and Commercial Banking System: Asset Mix
Loans Loans (net, exclusive of IBL) Cash and Due (net, exclusive of IBL) Cash & Due 40.7% from Banks 38.5% from Banks 7.6% 7.4% ROPOA (net) ROPOA(net) 5.7% 5.4%
IBL IBL 8.3% 7.0% Investments (Net) Other Assets Investments (Net) Other Assets 32.8% 9.3% 28.6% 8.7% P3,297.2 Billion P3,617.6 Billion December 2003 December 2004
Deposit liabilities continued to be the main source of funds, expanding to 68.3 percent of the industry’s total liabilities and capital accounts from 67.0 percent last year. Funding mix barely changed as the remaining components were divided into capital accounts, bills payable and other liabilities capturing 12.5 percent (down from 12.9 percent last year), 9.7 percent (down from 10.6 percent) and 8.1 percent (down from 8.4 percent), respectively. On the other hand, the relatively new unsecured subordinated debt inched up to 1.4 percent from 1.1 percent as more universal banks issued Tier 2 (supplementary) regulatory capital following the push from BSP to explore alternative funding source and further deepen the capital market.
Universal and Commercial Banking System: Funding Mix
Deposits Deposits 67.0% 68.3%
Bills Payable Bills Payable 9.7% 10.6%
Other Liabilities Other Liabilities 8.4% 8.1%
Capital Accounts Capital Accounts Unsecured Subordinated Debt 12.9% Unsecured Subordinated Debt 12.5% 1.1% 1.4%
P3,297.2 Billion P3,617.6 Billion December 2003 December 2004
Source: Office of Supervisory Policy Development, Supervision and Examination Sector 36
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
Universal and Commercial Banking System: Balance Sheet Structure
Major Accounts 2000 2001 2002 2003 2004
Total Assets 99.9 % 100.1 % 99.9 % 100.0 % 100.0 % Cash and Due from Banks 11.0 % 9.0 % 9.4 % 7.4 % 7.6 % Interbank Loans Receivable (IBL) 6.0 % 6.9 % 6.7 % 8.3 % 7.0 % Loans, net 45.8 % 44.0 % 41.5 % 40.7 % 38.5 % Investments, net 21.3 % 24.6 % 26.7 % 28.6 % 32.8 % ROPOA, net 4.4 % 5.1 % 5.5 % 5.7 % 5.4 % Other Assets 11.5 % 10.4 % 10.2 % 9.3 % 8.7 % TotalDeposits Liabilities and Capital 100.1% 100.0% 100.0% 100.0% 100.0% Deposits 64.8 % 67.7 % 67.7 % 67.0 % 68.3 % Bills Payable 12.8 % 10.5 % 10.4 % 10.6 % 9.7 % Special Financing 0.1 % 0.1 % 0.0 % 0.0 % 0.0 % Unsecured Subordinated Debt 0.0 % 0.0 % 0.0 % 1.1 % 1.4 % Other Liabilities 9.3 % 8.5 % 8.9 % 8.4 % 8.1 % Capital Accounts 13.0 % 13.2 % 13.0 % 12.9 % 12.5 %
LOANS. Total loan portfolio, gross (inclusive of interbank loans) of the universal and commercial banking industry reached P1,796.5 billion, an expansion of 1.7 percent from P1,766.8 billion as of end-year 2003. Excluding interbank lendings, loans, gross posted a higher growth of 3.3 percent to P1,541.7 billion from last year. This is attributed to the 7.0 percent slump in interbank loans, particularly by private domestic universal banks and foreign banks (branches and subsidiaries), to P254.8 billion from P274.0 billion last year. Meanwhile, FCDU loans (inclusive of interbank loans) tracked its downtrend last year, declining by 4.9 percent to US$10.6 billion from last year’s US$11.1 billion on the back of the peso’s relative weakness against the dollar.
Main drivers of loan portfolio Universal(1.9% and Commercial Banking System growth (exclusive of interbank loans) Total Loans Outstanding (exclusive of IBL) were the private domestic UBs whose Annual Growth 16.0 loans rose by P26.8 billion or 2.8 14.0 12.0 percent, outperforming last year’s 10.0 t 8.0 growth of P25.9 billion. Government 3.3% 6.0 4.0 0.1% banks followed with loan growth of 6.9% 2.0 (1.9%) In Percen P13.8 billion or 6.9 percent, private 0.0 0.27% -2.0 3.2% domestic commercial banks with -4.0 1.6% growth of P6.1 billion or 5.2 percent, -6.0 -8.0 and foreign banks (branches and -10.0 (5.4)% -12.0 subsidiaries) with expansion of only 1997 1998 1999 2000 2001 2002 2003 2004 P2.1 billion or 1.0 percent.
The biggest loan exposure of the universal and commercial banking industry was to the Manufacturing sector at 23.6 percent of TLP, gross expanding by 14.5 percent during the year. The Real Estate, Construction, Renting and Business Activities sector and the Wholesale, Retail Trade and Repair sector followed at 13.1 percent and 12.5 percent, respectively. Source: Office of Supervisory Policy Development, Supervision and Examination Sector 37
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
Financial Intermediation, Universal and Commercial Banking System Loan Loan inclusive of interbank loans, dropped by Portfolio Structure 8.8 percent or P40.2 billion to P414.6 By Industry Sector billion. Consequently, its share to TLP, December 2003 5.0% gross slimmed to 23.1 percent from end- 4.4% 21.0% 3.7% December 2003’s 25.7 percent. This 4.5% transpired as the interbank lending activities were reduced by 7.0 percent. 9.4% Year-on-year expansion in lending 15.5% activities was reported in the following 10.2% industry sectors:
14.2% 12.1% a) Manufacturing – P53.6 billion or 14.5 P1,766.8 Billion percent; December 2004 b) Agriculture, Fishery, Hunting & 6.3% 4.2% Forestry – P13.7 billion or 17.3 4.3% 23.6% percent; 5.2% c) Electricity, Gas and Water – P12.5 billion or 19.4 percent; 7.7% d) Wholesale, Retail Trade and Repair – P10.7 billion or 5.0 percent; and 14.2% 8.9% e) Others, specifically: - Private Households with 12.5% 13.1% Employed Persons – P19.2 P1,796.5 Billion billion or 156.8 percent; - 2003 2004 Public Administration and Defense, Compulsory Social Manufacturing 21.0% 23.6% Securities – P3.6 billion or 11.2 Interbank Loans (IBL) 15.5.% 14.2% Real Estate, Construction, percent; 14.2% 13.1% Renting & Business Activities - Hotels and Restaurants – P1.7 12.5% Wholesale, Retail Trade 12.1% billion or 10.8 percent; & Repair - Health and Social Work – P1.6 Financial Intermediation 10.2% 8.9% billion or 27.6 percent; and - Education – P1.4 billion or 15.3 Other Community, Social & 9.4% 7.7% Personal Activities percent. Agriculture, Fishery, Hunting & Forestry 4.5% 5.2% On the other hand, the industry Electricity, Gas & Water 3.7% 4.3% sectors with year-on-year loan Transportation, Storage & 4.2% Communication 4.4% contractions were as follows: Others 5.0% 6.3% a) Financial Intermediation (inclusive of IBL) – P40.2 billion or 8.8 percent; b) Other Community, Social and Personal Activities – P27.9 billion or 16.7 percent; c) Real Estate, Construction, Renting and Business Activities – P16.4 billion or 6.5 percent; and
Source: Office of Supervisory Policy Development, Supervision and Examination Sector 38
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004 d) Transportation Storage and Communication – P2.1 billion or 2.7 percent.
Albeit at a slower pace, real Universal and Commercial Banking System estate loans rose anew by 3.2 percent Real Estate Loans or P5.7 billion to P182.9 billion from In P Billion In Percent 250.0 4.0% end-December 2003’s growth rate of 184.6 2.0% 200.0 183.2 175.7 177.2 182.9 3.8 percent or P6.4 billion. In terms 170.7 0.0% (3.2%) 150.0 of proportion to total loans (exclusive (4.8%) (2.0%) 0.8% 3.8% (2.8%) of interbank loans), real estate loans 100.0 (4.0%) (9.6%) was unchanged from last year’s 11.9 (6.0%) 50.0 percent. (8.0%) 0.0 (10.0%) 1999 2000 2001 2002 2003 2004 Real estate sector lending Levels Growth remained concentrated in NCR (Metro Manila) at P149.6 billion or 81.8 percent. Small proportions were dispersed in Region VII (Central Visayas) at P10.4 billion or 5.7 percent and in Region IV (Southern Tagalog) at P8.3 billion or 4.5 percent.
Moreover, majority of the real estate loans were for commercial purposes at P150.9 billion, up by 3.4 percent from last year’s P146.0 billion. This accounted for 82.5 percent of the industry’s total real estate loans. On the other hand, the remaining 17.5 percent represented for the corresponding rise in real estate loans to acquire residential properties (up by 2.5 percent to P31.9 billion from end-2003’s P31.1 billion) mainly due to increased appetite from overseas Filipino workers (OFW) to acquire their ‘dream’ houses.
Domestic commercial banks largely extended the real estate loans worth P172.8 billion (or 94.5 percent of the total industry’s real estate loans vs. last year’s 93.7 percent), up by 4.1 percent from last year’s P166.0 billion. In contrast, foreign banks (branches and subsidiaries) contributed the minority 5.5 percent or P10.0 billion, down by 6.3 percent from last year’s P11.1 billion.
Reflecting the improved quality of the real estate loans, past due ratio exhibited a downtrend to 20.3 percent as of end-December 2004 from 21.9 percent as of end-December 2003. Hence, year-on-year past due real estate loans to total loans (exclusive of interbank loans) marginally dropped to 2.4 percent from last year’s 2.6 percent.
Likewise, past due ratios of commercial purpose and residential real estate loans dropped to 18.3 percent (from end-December 2003’s 19.1 percent) and to 2.0 percent (from end-December 2003’s 2.8 percent), respectively.
Source: Office of Supervisory Policy Development, Supervision and Examination Sector 39
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
Growth of credit card receivables slightly improved at 16.7 percent from 16.3 percent at end-year 2003. However, this was relatively dull compared with end-year 2002’s growth of 41.5 percent as Circular No. 398 tightened the rules and regulations governing credit card operations of banks and their subsidiary/affiliate credit card companies. Total outstanding CCRs settled at P47.6 billion or 3.1 percent of total loans (exclusive of interbank loans). Major players were the foreign banks (branches and subsidiaries) accounting for 73.0 percent of total industry CCRs. Meanwhile, quality improved as past due CCRs significantly declined to 17.0 percent from 20.4 percent last year.
On the other hand, the effect of the implementation of R.A. No. 9224 (an act rationalizing the excise tax on automobiles) lingered as auto loans grew marginally to P14.1 billion at end-year 2004. Likewise, past due ratio as well as the ratio of auto loans to total loans (exclusive of interbank loans) were unchanged from last year at 5.8 percent and 0.9 percent, respectively. Private domestic universal banks consistently held the bulk of the industry’s total auto loans at 72.5 percent or P10.2 billion.
Universal and Commercial Banking System Total consumer loans (auto Consumer Loans and Components loans, credit card receivables and In P Billion In Percent residential real estate loans) picked up 50.0 45.0 by 8.8 percent to P93.7 billion from 35.0 40.0 25.0 end-December 2003’s P86.1 billion.
30.0 15.0 This accounted for 6.1 percent of the 5.0 total loan portfolio (exclusive of 20.0 (5.0)
(15.0) interbank loans), a slight uptrend from 10.0 (25.0) last year’s 5.8 percent. - (35.0) 1999 2000 2001 2002 2003 2004
Auto Loans Level Credit Card Receivables Level
Residential Loans Level Consumer Loans Growth Based on the preliminary data as of end-September 2004, the compliance with the mandatory credit allocation requirements for small-and-medium enterprises as prescribed under R.A. No. 6977, as amended, surpassed the 8 percent minimum at 20.6 percent. The industry released P88.2 billion (vs. the required P54.3 billion or 6 percent minimum) and P98.0 billion (vs. the required P18.1 billion or 2 percent minimum) as aggregate exposure to small and medium enterprises.
Based on preliminary data as of end-September 2004, agrarian reform and agricultural credits prescribed under P.D. No. 717, as amended, showed that the industry was still short of the minimum 10 percent for agrarian reform at 8.6 percent or P74.1 billion (vs. the required P85.9 billion) as lending activities remain consumer-driven. Nonetheless, the industry was at par with the minimum 25 percent for agricultural loans in general amounting to P215.1 billion (vs. the required P214.8 billion).
Source: Office of Supervisory Policy Development, Supervision and Examination Sector 40
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
The industry reduced its Universal and Commercial Banking System holdings of bad loans thru foreclosure NPLs and NPL Coverage Ratio proceedings, dacion en pago In P Billion In Percent arrangement or sales to asset 300.0 70.0 management companies (AMCs). The 250.0 60.0 50.0 initial bulk sale in the latter part of 2004 200.0 40.0 150.0 set the precedent of further sales to 30.0 100.0 AMCs. This cut back the NPLs by 7.5 20.0 percent to P227.0 billion from P245.5 50.0 10.0 - 0.0 billion last year. The NPL ratio 1997 1998 1999 2000 2001 2002 2003 2004 consequently improved to 12.7 percent NPLs Loan Loss Reserves NPL Ratio NPL Coverage Ratio from 14.1 percent as of end-year 2003. (Table 15)
The industry continued to beef up loan loss reserves by 5.5 percent to P137.1 billion. Coupled with receding NPLs, the industry chalked up its highest ever NPL coverage ratio in years at 60.4 percent, lessening its vulnerability.
Universal and Commercial Banking System: Comparative NPL Ratio All subgroups recorded By Industry Sub-group improving NPL ratios with private
25.0 domestic UBs and government banks
20.0 t having the largest decline. Foreign 15.0 banks (branches and subsidiaries) still In Percen 10.0 had the best loan portfolio quality 5.0 among the subgroups. Along with 0.0 1997 1998 1999 2000 2001 2002 2003 2004 the government banks, both Universal and Commercial Banks subgroups performed well, with Private Domestic- UBs Private Domestic- KBs below industry average NPL ratios. Government Banks Foreign Banks (Branches & Subsidiaries) On the other hand, private domestic commercial banks and private domestic universal banks, despite their downtrends, maintained above industry NPL ratios at 18.4 percent and 14.4 percent, respectively.
Restructured loans, gross finally declined by 8.0 percent, following a series of yearly growth that started to ease in 2001. As the industry slowed down on restructured loans, the ratio of restructured loans to TLP, gross continued to decline to 6.9 percent from 7.6 percent last year.
Likewise, the foreclosure of mortgages in settling delinquent loans eased up with a marginal year-on-year growth in ROPOA, gross of 4.2 percent down from previous years’ double-digit growth which even reached as high as 32.0 percent in 2000. Together with the 7.5 percent reduction in NPLs, the industry was able to pare down its non-performing assets (NPAs) to P430.4 billion, 2.7 percent lower than last year’s P442.3 billion. Accompanied by the 9.6 percent expansion in gross assets to P3,770.6 billion, asset quality improved further as the NPA ratio dipped to 11.4 percent from 12.9 percent last year.
Source: Office of Supervisory Policy Development, Supervision and Examination Sector 41
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
Universal and Commercial Banking System With an additional 6.3 NPAs and NPA Coverage Ratio percent increase in 2004, the NPA In P Billion In Percent 500.0 60.0 reserves amounted to P153.0 billion. 450.0 This enhanced the industry’s NPA 400.0 50.0 350.0 40.0 coverage ratio to 35.6 percent, 300.0 250.0 30.0 although 2.9 percentage points 200.0 20.0 short of its highest ever recorded 150.0 100.0 10.0 coverage ratio at 38.4 percent in 50.0 - 0.0 1997. 1997 1998 1999 2000 2001 2002 2003 2004 NPAs NPA Reserves NPA Ratio NPA Coverage Ratio
Universal and Commercial Banking System: Comparative NPA Ratio All subgroups recorded By Industry Sub-group downward trend in NPA ratios after end-year 2001. However, private 20.0 domestic universal banks and private t 15.0 domestic commercial banks remained 10.0
In Percen above the industry average in
5.0 contrast to government banks and
0.0 foreign banks (branches and 1997 1998 1999 2000 2001 2002 2003 2004 subsidiaries) with below the industry Universal and Commercial Banks Private Domestic- UBs average NPA ratios. Private Domestic- KBs Government Banks Foreign Banks (Branches & Subsidiaries)
From its peak at 28.6 percent Universal and Commercial Banking System in 2001, the distressed assets ratio Distressed Assets Ratio
(broader measure of asset quality) In P Billion In Percent 500.0 35.0 slightly improved to 25.2 percent at 450.0 end-year 2004. Some 4.7 percent was 400.0 30.0 350.0 25.0 shaved off in 2004 from distressed 300.0 250.0 20.0 assets which was down to P502.8 200.0 billion. All subgroups contributed to 150.0 15.0 100.0 10.0 the improving asset quality of the 50.0 industry. Foreign banks (branches 0.0 5.0 1997 1998 1999 2000 2001 2002 2003 2004 and subsidiaries) led the pack at 5.4 NPAs Restructured Loans (Performing) percent, the lowest among the Distressed Ratio subgroups, while private domestic commercial banks consistently posted the highest distressed assets ratio at 35.8 percent.
INVESTMENTS. Funds were still pouring in to securities as investments, net further expanded by 26.0 percent to P1,188.1 billion. Investments, net now comprised 32.8 percent of total assets of the universal and commercial banking industry from 28.6 percent last year and 21.3 percent at end-year 2000. Investments in debt instruments made up 91.8 percent and the remaining 8.2 percent were in equity holdings. The bulk of total investments in debt
Source: Office of Supervisory Policy Development, Supervision and Examination Sector 42
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004 instruments are in less risky government securities representing 50.9 percent (from 46.1 percent last year) or P557.9 billion. The 42.1 percent increment in the industry’s investments in government securities dislodged foreign denominated debt securities from the top slot of preferred investment medium. Foreign denominated debt securities, which rose by 16.9 percent, accounted only for 46.8 percent (from 51.5 percent last year) or P513.3 billion of the total investments in debt instruments. This is largely composed of direct and indirect exposure to the Republic of the Philippines (ROP), the latter by way of repo transactions. Finally, investments in private securities grew by 17.3 percent to P24.4 billion, comprising no more than 2.2 percent (down from last year’s 2.4 percent) of the total investments in debt instruments.
DEPOSITS LIABILITIES. After Universal and Commercial Banking System Comparative Deposits Growth Rate the regional crisis in 1997, the industry (In Percent) attained its first double-digit deposit 80.0 growth at 11.9 percent to P2,472.3 billion 60.0 from end-year 2003’s P2,209.8 billion. 40.0 Foreign banks (branches and subsidiaries) 20.0 posted the highest growth rate at 19.5 0.0 percent, edging private domestic
(20.0) commercial banks which grew by 19.0 1997 1998 1999 2000 2001 2002 2003 2004 percent. Government banks and private Universal and Commercial Banks Private Domestic - UBs domestic universal banks likewise rose by Private Domestic - KBs Government Banks 12.9 percent and 9.4 percent, respectively. Foreign Bank Branches and Subsidiaries The robust growth in total deposit liabilities may be attributed in part to the preference shift of pre-need clients brought about by the non-servicing of claims by a leading pre-need company during the second half of 2004. Peso time deposits conveniently became the substitute of such long-term fund sources as said account made a strong year-on-year upsurge of 89.1 percent to P241.5 billion from P127.8 billion.
Private domestic universal banks Universal and Commercial Banking System consistently held the majority of the Distribution of Deposits industry’s deposit base at P1,662.6 billion 2004 or 67.2 percent, tapering from last year’s 2003 2002 68.7 percent. Whereas, foreign banks 2001
(branches and subsidiaries), government 2000 banks and private domestic commercial 1999 banks raised their share to 14.1 percent or 1998 P349.7 billion, 10.2 percent or P251.8 1997 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% billion and 8.4 percent or P208.3 billion, Private Domestic - UBs respectively. Government Banks Private Domestic - KBs Foreign Banks (Branches & Subsidiaries) In terms of deposits generated per banking office, foreign banks (branches and subsidiaries) were still more efficient than local banks. Foreign banks’ volume of deposits per banking office rose by 18.1 percent to P2.1
Source: Office of Supervisory Policy Development, Supervision and Examination Sector 43
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004 billion from last year’s P1.7 billion. On the other hand, similar ratio for private domestic universal and commercial bank marginally went up by 9.9 percent to P0.5 billion.
Even as the year-on-year double-digit 15.9 percent growth in foreign currency deposits outmatched the 9.9 percent expansion of peso deposit accounts, a large part of total deposit liabilities still came from peso deposit accounts at 65.5 percent. Foreign currency deposits accounted for 34.5 percent of total deposit liabilities, up from 33.3 percent last year.
The industry’s deposit mix Universal and Commercial Banking System showed that the bulk of peso deposits Deposit Mix came from demand/NOW and savings accounts at 85.1 percent, down from PESO DEPOSITS last year’s 91.3 percent. While the December 2003 December 2004 share of interest-sensitive time 8.7% 14.9% deposits went up to 14.9 percent from 8.7 percent. An apparent shift of pre- need clients to term deposits ensued 91.3% 85.1% after a leading pre-need company failed in the second half of 2004 to deliver on contracted service plans. P1,474.4 Billion P1,619.9 Billion Meanwhile, foreign currency depositors preferred time deposits FOREIGN CURRENCY DEPOSITS (with a share of 67.7 percent, up from December 2003 December 2004 last year’s 66.4 percent) as against demand/NOW and savings accounts 33.6% 32.3% (which comprised only 32.3 percent, down from last year’s 33.6 percent) due to increasing OFW dollar savings 66.4% 67.7% and perceived greater stability of the dollar against the peso. P735.5 Billion P852.4 Billion
Demand/NOW & Savings Time Deposits The bulk of the industry’s Deposits peso deposit liabilities was sourced from the private sector at 88.5 percent. The balance of 11.5 percent was accounted for by government deposits which rose from last year’s 17.8 percent to P186.5 billion. Of these deposits, 76.4 percent or P142.4 billion was held by government banks while the remaining 23.6 percent or P44.1 billion was placed in private banks authorized by the Monetary Board to accept government deposits.
With our domestic capital market largely underdeveloped, deposits remained the main source of funding for the industry with a five-year high ratio to total liabilities and capital accounts at 68.3 percent (up from year 2003’s 67.0 percent and year 2000’s 64.8 percent).
CAPITALIZATION. The industry posted the highest ever year-on-year increase in total capital accounts at 6.3 percent to P450.5 billion from only P423.8 billion as of end- December 2003. (Table 10) This consisted of surplus, surplus reserves and current income at
Source: Office of Supervisory Policy Development, Supervision and Examination Sector 44
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
43.6 percent (down from 44.4 percent a year ago), paid-in capital at 40.3 percent (down from 41.4 percent) and local branches of foreign banks’ net due to head office and assigned capital at 12.6 percent (up from 11.2 percent) and 3.5 Universal and Commercial Banking System percent (up from 3.0 percent), respectively. Breakdown of Total Capital Accounts All components of capital accounts posted As of end-December 2004 gains from last year, foremost were the local Total P450.5 Billion branches of foreign banks’ net due to head Surplus, Surplus Reserves & Current Income offices and assigned capital which grew by 43.6% Paid-in Capital 19.7 percent or P9.3 billion and 25.1 percent or 40.3% P3.2 billion, respectively. Private domestic universal banks held the biggest chunk of the industry’s paid-in capital (at 63.9 percent) and surplus, surplus reserves and current income (at 85.2 percent). Likewise, the industry’s growth in paid-in capital and in surplus, surplus reserves and current income were
Net Due to H.O. Assigned Capital largely accounted for by the respective 4.2 12.6% 3.5% percent or P4.7 billion and 3.1 percent or P5.0 billion increments in said capital accounts of private domestic universal banks.
However, total capital accounts to total assets ratio declined to 12.5 percent from 12.9 percent a year ago and 13.2 percent in 2001. The slight setback in the said ratio resulted from the faster year-on-year growth in total assets at 9.7 percent as against the 6.3 percent increment in total capital accounts.
Universal and Commercial Banking System Status of Banks' Compliance with the Minimum Amount of Capital
2000 2001 2002 2003 2004 A. Number of Operating Universal and 45 44 42 42 42 A.x Commercial Banks Universal 17 18 18 18 18 Commercial 28 26 24 24 24 B.xx UBs and KBs with Capital Equal to or in Excess 35 36 35 34 33 B.xx of the Minimum Amount Required Universal (K > P4.95 billion) 15 14 16 14 15 Commercial (K > P2.40 billion) 20 22 19 20 18
A total of 33 banks or 78.6 percent (from last year’s 34 banks or 81.0 percent) of the 42 operating universal and commercial banks as of end-year 2004 have capitalization which were equal to or in excess of the minimum amount required. Compliance ratio of commercial banks slightly declined to 75.0 percent (18 KBs out of 24) from 83.3 percent last year while universal banks improved to 83.3 percent (15 UKBs out of 18) from 77.8 percent last year.
The incorporation of market risk in the risk-based capital adequacy framework effective 1 July 2003 under Circular No. 360 raised the risk weighted assets by 0.6 percent to Source: Office of Supervisory Policy Development, Supervision and Examination Sector 45
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
P1,941.6 billion as of end-June 2004 from P1,929.9 billion as of end-December 2003. However, a higher 8.3 percent increase in qualifying capital to P328.3 billion as of end-June 2004 brought on by the active issuances of Tier 2 unsecured subordinated debt, pulled up the industry’s CAR to 16.9 percent from 15.7 percent as of end-December 2003. Consolidated CAR followed similar trend peaking to an all-time high of 18.4 percent as of end-June 2004 from 17.3 percent as of end-December 2003. Both solo and consolidated CARs exceeded the minimum required ratio of 10 percent by 6.9 percentage points and 8.4 percentage points, respectively.
Universal and Commercial Banking System: Comparative Capital Adequacy Ratio (CAR)
Solo Consolidated End-DecemberEnd-June End-December End-June 2002a/ 2003b/ 2004 2002a/ 2003b/ 2004
(In P Billion) Tier 1 298.4 313.2 332.6 299.5 308.5 326.2 Tier 2 39.8 64.1 69.5 41.2 64.9 70.4 Deductions 66.1 74.2 73.8 18.1 12.8 12.2
Qualifying Capital 272.1 303.1 328.3 322.6 360.6 384.5
Risk Weighted Assets (RWA) - net 1,811.5 1,929.9 1,941.6 1,949.2 2,078.8 2,088.9 (In Percent) Capital Adequacy Ratio (CAR) 15.0 15.7 16.9 16.6 17.3 18.4
a / Based on Circular No. 280 b / Based on Circular Nos. 280 and 360, effective 1 July 2003
SELECTED CONTINGENT ACCOUNTS
TRADE-RELATED CONTINGENT ACCOUNTS. Total trade-related contingent accounts rose minimally by only 2.3 percent to P45.4 billion from P44.4 billion last year, measly compared to its growth of 9.3 percent at end-year 2003. Private domestic universal banks remained as the key industry players contributing around P32.8 billion or 72.2 percent of the total trade-related contingent accounts. However, this share was a reduction from last year’s 74.6 percent as the subgroup posted a year-on-year decline of 0.9 percent from P33.1 billion.
Behind private domestic universal banks were government banks which captured P5.2 billion or 11.4 percent, stepping up last year’s share of 10.2 percent or P4.5 billion. Meanwhile, as foreign banks (branches and subsidiaries) recorded higher trade volumes of 42.8 percent to P4.2 billion from P3.0 billion, the subgroup held 9.3 percent of the industry’s total trade- related contingent accounts (up from end-year 2003’s 6.7 percent). Finally, private domestic commercial banks accounted for merely P3.2 billion or 7.1 percent (down from 8.5 percent) of trade volumes following significant drop of 15.0 percent from end-year 2003’s P3.8 billion.
Source: Office of Supervisory Policy Development, Supervision and Examination Sector 46
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
Unused import-related commercial letters of credit still held the bulk of total trade- related contingent accounts at P39.9 billion or 87.9 percent (slightly lower than last year’s 88.1 percent). Whereas, export-related contingent accounts maintained the balance of P5.5 billion or 12.1 percent (inching up from last year’s 11.9 percent).
BANK GUARANTEES. Oustanding bank guarantees declined by 5.9 percent to P105.1 billion from end-year 2003’s P111.7 billion, a reversal after peaking by as much as 15.9 percent last year. This was attributed to the general year-on-year slowdown in almost all subgroups except government banks which marginally rose by 0.5 percent to P43.8 billion.
Private domestic universal banks were consistently the leading issuers of guarantees at P45.5 billion or 43.3 percent (down from 45.9 percent) despite decreasing the most by 11.3 percent from last year. Government banks hold the second largest share in the industry’s total bank guarantees at 41.7 percent (up from end-year 2003’s 39.0 percent). Foreign banks (branches and subsidiaries) and private domestic commercial banks trailed behind with P11.4 billion or 10.9 percent (from 10.7 percent) and P4.4 billion or 4.2 percent (from 4.4 percent) shares, respectively.
As to the composition of the industry’s bank guarantees, 43.3 percent or P45.5 billion was in the form of stand-by letters of credit, 40.0 percent or P42.1 billion was in guarantees on foreign loans, 12.3 percent or P12.9 billion on shipside bonds/airway bills and 4.4 percent or P4.6 billion in other forms of guarantees.
DERIVATIVES. The notional value of derivatives contracts narrowed down by 16.2 percent to P1,012.2 billion from last year’s P1,207.8 billion following its double-digit increment of 29.8 percent in 2003. Of the four subgroups, lone gainer was the private domestic commercial banks, which ballooned by 112.4 percent or P21.7 billion to P41.0 billion from last year’s P19.3 billion. Whereas, foreign banks (branches and subsidiaries) and government banks contracted significantly by 23.3 percent or P205.5 billion and 29.1 percent or P2.3 billion, respectively. Although, foreign banks (branches and subsidiaries) still held the bulk of the industry’s derivatives activities with a 66.7 percent share, considerably reduced from last year’s 72.9 percent. The balance was held by private domestic universal banks at 28.7 percent, private domestic commercial banks at 4.1 percent and government banks at 0.6 percent.
Currency forwards consistently held the largest share of the industry’s total derivatives contracts at 75.5 percent or P764.5 billion, inching up by only 1.1 percent from last year. There was a noticeable shift to interest rate swaps which grew by 52.3 percent to P197.5 billion, accounting for the second largest slice at 19.5 percent. Moreover, the industry once again engaged in trading financial futures after being dormant for two years, with a notional amount of P28.2 billion or 2.8 percent of the total derivatives contracts. Finally, financial options and interest rate forwards held the minority shares at 2.0 percent or P19.8 billion and 0.2 percent or P2.2 billion, respectively.
Source: Office of Supervisory Policy Development, Supervision and Examination Sector 47
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
THRIFT BANKS
OVERVIEW
The thrift bank industry’s operations in year 2004 resulted in asset expansion, a bigger and better loan and investment portfolio and improved profitability. However, asset quality is undermined as the industry continued to weather the problem of delinquent loans largely thru foreclosure of mortgages.
Despite a fewer number of industry players (87 vs. 92 last year), thrift banks managed to register an 11.4 percent growth in total assets, reaching P305.4 billion as against last year’s level of P274.3 billion. This double-digit increment was the highest so far in the post- Asian crisis period. Asset expansion during the year was bolstered by improved credit access by 7.0 percent to P170.7 billion and rise of investments by 27.7 percent to P55.4 billion. (Table 16)
By main group, the share of linked Thrift Banking System 1 Market Structure of Assets thrift banks to total assets stood at 65.9 percent or P201.3 billion. Non-linked thrift 2004 2003 banks, which consisted mostly of smaller- 2002 sized institutions, accounted for the balance 2001 of 34.1 percent or P104.1 billion. By 2000 subgroup, domestic bank-linked entities kept 1999 the bulk of the total industry assets at 62.7 1998 1997 percent or P191.4 billion. 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Domestic Bank-Linked Non-Bank Linked Foreign Bank- Linked Non-Linked The industry managed to be profitable after a lackluster performance in 2003 on the back of higher net interest earnings by 12.7 percent or P1.3 billion and extraordinary credits by 79.1 percent or P0.6 billion. The P43 million NIAT generated during the year was a turnaround from the P248 million net loss incurred in 2003 but lower compared to 2002’s NIAT of P655 million. Nonetheless, the growth in NIAT reverted the return on assets (ROA) and return on equity (ROE) ratios to positive 0.01 percent and 0.1 percent, respectively, from the negative ratios of 0.1 percent and 0.6 percent for 2003. (Table 17)
1 Linked thrift banks are those whose operations are controlled by another domestic bank, a foreign bank or an NBFI through direct and indirect holdings of more than 50% of the voting stock of the thrift bank or through exercise of management by common directorships and officerships.
Source: Office of Supervisory Policy Development, Supervision and Examination Sector 48
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
Deposit liabilities continued to be the main source of funding at P223.7 billion, higher by 13.5 percent from last year’s P197.2 billion. Depositors’ preference for savings accounts, which made up the largest slice of total deposits at 61.0 percent or P136.4 billion, persisted. Time deposits, on the other hand, exhibited the largest expansion from last year by 104.4 percent to P69.1 billion.
Liquidity position strengthened as liquid asset to deposits ratio inched up to 36.7 percent from 33.7 percent last year, following the increase in cash and due from banks and investments (net of equity investments) by 14.8 percent and 28.3 percent, respectively. Meanwhile, loans to deposits ratio fell to 76.3 percent from 80.9 percent as preference shifted to both short term and long term investments.
Thrift banks continue to play a major role in providing credit to the shelter program of the government. As in the previous periods, the Real Estate, Renting, Business Activities and Construction sector was still the major beneficiary of lending activities.
The boost in bank lending was supported by better loan quality, as reflected by the drop in the ratio of non-performing loans (NPLs) to 11.0 percent from previous year’s ratio of 12.1 percent. Foreclosure proceedings were the main remedial measures undertaken to reduce NPLs as the ratio of real and other properties owned or acquired (ROPOA), net to total assets increased further to 10.8 percent from 10.2 percent. Hence, the industry’s non-performing assets (NPA) ratio at 15.9 percent remained higher than the NPL ratio.
Despite a slightly lower capital base by 3.8 percent to P39.7 billion, the industry remained solvent as it sustained compliance with the risk-based capital adequacy ratio (CAR). CAR on both solo and consolidated basis stood at 17.9 percent as of end-June 2004. Although lower than the 18.9 percent ratio as of end-December 2003, this was still above the 10 percent minimum ratio required by the BSP as provided for under Circular No. 280.
Linked thrift banks continued to manifest strong presence in the list of top five thrift banks. The top 5 thrift banks, combined, held 60.8 percent of total assets, 63.3 percent of total loans, 65.7 percent of total deposits and 50.6 percent of total capital. Among individual banks, BPI Family remained the country’s biggest thrift bank in terms of assets, loans, deposits and capitalization.
Source: Office of Supervisory Policy Development, Supervision and Examination Sector 49
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
Top Five Thrift Banks Based on Published Statements as of 20 December 2004 (Amounts in P Billion) Assets Loans
Rank Name of Bank Amount Rank Name of Bank Amount
1 BPI Family Savings Bank 63.7 1 BPI Family Savings Bank 42.1 2 Philippine Savings Bank 46.0 2 Philippine Savings Bank 24.2 3 Planters Development Bank 32.1 3 RCBC Savings Bank 19.0 4 RCBC Savings Bank 31.6 4 Planters Development Bank 16.2 5 Asiatrust Development Bank 12.3 5 Asiatrust Development Bank 6.6 Total 185.7 Total 108.1 % Share 60.8 % Share 63.3 D eposits C apital A ccounts Rank Name of Bank Amount Rank Name of Bank Amount 1 BPI Family Savings Bank 49.7 1 BPI Family Savings Bank 6.1 2 Philippine Savings Bank 40.1 2 Philippine Savings Bank 4.7 3 RCBC Savings Bank 28.0 3 The Manila Banking Corp. 4.0 4 Planters Development Bank 20.0 4 Planters Development Bank 2.9 5 Asiatrust Development Bank 9.2 5 RCBC Savings Bank 2.4 Total 147.0 Total 20.1 % Share 65.7 % Share 50.6
OPERATING NETWORK
The number of thrift banks becomes leaner in response to competitive pressures calling for stronger and more viable banks. As of end-December 2004, the total number of head offices dropped to 87 from 92 last year. In contrast, the number of branches and other offices increased to 1,193 from 1,185 with 8 new, additional offices.
One thrift bank (EIB Savings Bank) opened on 08 September 2004, whereas two thrift banks (i.e., First SLA and Ever DB) were closed effective 08 September 2004 and 25 November 2004, respectively. Further, four TBs converted to rural banks during the year following the approval of the Monetary Board and these include Lipa City DB, Batangas DB, First Provincial DB and Nation DB.
The concentration of thrift banking offices remained in the National Capital Region (NCR) with 534 bank offices or 41.7 percent of the total. Region IV-A (CALABARZON) was a far second with 257 bank offices or 20.1 percent. Table 18 indicates that Autonomous Region of Muslim Mindanao still had no thrift banking office.
Delivery of banking services was not compromised by the dwindling number of TBs in the country but rather enhanced by the growing network of Automated Teller Machines (ATMs).
Source: Office of Supervisory Policy Development, Supervision and Examination Sector 50
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
Twenty thrift banks have a total of 369 ATMs, with 137 more units from 232 units last year. About 312 ATMs were located within the premises of the bank while the remaining 57 units were installed in convenient places outside the bank premises. (Table 19)
The NCR had the most number of ATMs with 225 units or 61.0 percent of the total, followed by CALABARZON with 57 units or 15.4 percent. By main group, non-linked thrift banks held the most number of ATMs with 235 units or 63.7 percent whereas linked thrift banks held the balance of 134 units or 36.3 percent.
Aside from the ATM network, the industry continued to position itself to meet the rising customer need through innovative products and services. As of end-year 2004, the industry augmented its service delivery channels with 11 banks engaged in electronic banking services via mobile/non-mobile phones and/or internet; 2 authorized banks participated in the Bureau of Internal Revenue’s Electronic Tax Filing and Payment System; and 6 banks secured Internet and Mobile Banking Services via BancNet/MegaLink Switch. (Table 20)
RESULTS OF OPERATIONS
The industry ended 2004 with a significant recovery in net profits by 117.5 percent to P43 million over last year’s net loss of P248 million. This favorable development was primarily due to higher net interest income, up by 12.7 percent or P1.3 billion; and extraordinary credits, up by 79.1 percent or P0.6 billion. These 2 revenue sources contained the effect of the 8.9 percent or P1.3 billion appreciation in operating expenses. (Table 21)
Overall, thrift banks benefited from the good performance of linked thrift banks. Linked thrift banks recorded a positive P1.8 billion NIAT compensating for non-linked thrift banks’ net loss of a little less than P1.8 billion.
For the year ended 2004, total operating income settled at P15.6 billion, higher by 8.7 percent or P1.2 billion from P14.4 billion in the same period last year. This came about despite the cut in non-interest income by 2.6 percent or P99 million as net interest income rose by 12.7 percent or P1.3 billion. The major source of thrift banks’ income came from the usual lending and investment transactions as net interest income still accounted for the bulk at 76.6 percent or P11.9 billion of total operating income. Non-interest income’s share merely stood at 23.4 percent or P3.6 billion.
Source: Office of Supervisory Policy Development, Supervision and Examination Sector 51
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
The higher net interest income was fueled by better loan quality and increased investments in government securities as interest income climbed by 16.1 percent or P3.3 billion. This compensated for the 19.7 or P2.0 billion upsurge in interest expense and consequently brought up net interest margin to 5.6 percent from 5.4 percent last year.
Interest on loans, including interbank loans, accounted for 76.9 percent or P18.4 billion of the total P24.0 billion interest income, followed by interest on investments in debt instruments at 16.7 percent or P4.0 billion. On the other hand, 84.7 percent or P10.2 billion of the total P12.0 billion interest expenses was paid to depositors.
Meanwhile, service charges/fees/commissions made up 65.5 percent or P2.4 billion of the P3.6 billion total non-interest income. Other Income held the second spot at 21.3 percent or P0.8 billion.
Earning asset yield went up to 11.2 percent from 10.6 percent over the same period last year amidst a higher interest rate environment, improved loan quality and increased holdings in government securities. Funding cost likewise inched up but at a slower pace to 5.1 percent from 4.8 percent. The net result was a wider interest spread of 6.1 percent as against 5.8 percent last year.
Meanwhile, funding cost remained lower than the 91-day T-bill rate with the highest differential rate posted in 1998 at 286 basis points and the lowest in 2002 at 43 basis points. Year- on-year, the differential rate expanded to 222 basis points from 119 basis points in 2003. The wider gap is reflective of major part of funds sourced from less interest rate sensitive demand/NOW and savings deposit accounts.
Thrift Banking System: Selected Ratios vs. 91-day Treasury Bill Rate
(In Percent)
20.0 18.0 16.0 18.3 18.3 14.3 13.1 13.8 14.0 13.1 15.3 12.0 10.2 10.6 11.2 9.9 10.0 11.9 12.4 9.9 11.3 7.3 8.0 8.9 6.0 6.0 7.6 7.8 5.4 4.0 5.0 4.8 5.1 2.0 0.0 1997 1998 1999 2000 2001 2002 2003 2004 Earning Asset Yield Funding Cost Treasury Bill Rate (91-day)
Source: Office of Supervisory Policy Development, Supervision and Examination Sector 52
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
On the other hand, the gap between the earning asset yield and the T-bill rate closed in to 386 basis points from 457 basis points in 2003 as funds were used more to expand investments in government securities than in lending.
The industry continued to suffer from high operating expenses. Total operating expenses climbed by 8.9 percent or P1.3 billion from last year to P16.3 billion, driven mainly by higher overhead costs of P0.6 billion and other expenses of P0.8 billion.
The industry’s cost-to-income ratio Thrift Banking System went up to 95.6 percent from 93.8 percent Cost-to-Income Ratio last year as the P1.4 billion increase in 180.0 operating expenses, exclusive of bad debts 160.0 and provisions outpaced the P1.2 billion t 140.0 upswing in total operating income. Linked 120.0 100.0 thrift banks were still more cost efficient
In Percen 80.0 with a lower cost-to-income ratio of 76.9 60.0 percent (up from 75.7 percent last year) as 40.0 20.0 against non-linked thrift banks’ 137.6 0.0 percent (up from 118.3 percent last year). 1997 1998 1999 2000 2001 2002 2003 2004 TB system Linked TBs Non-Linked TBs
Thrift Banking System: Comparative Profitability Indicators As of End-December 2004
Earning Net Cost-to- Funding Interest By Analytical Group Asset Interest Income Cost Spread Yield Margin Ratio
TOTAL THRIFT BANKS 11.2 5.1 6.1 5.6 95.6
FI-Linked Thrift Banks 11.9 5.3 6.6 6.4 76.9
9.8 4.8 5.0 4.1 137.6 Non-Linked Thrift Banks
Thrift Banking System Comparative Return on Assets (ROA) ROA improved to positive 0.01 percent from negative 0.1 percent last 6.0 year. The highest ROA ratio since end- t year 2000 industry was recorded at 3.0 end-year 2002 at positive 0.3 percent. In Percen
0.0 By subgroup, ROA of domestic bank- linked thrift banks and non-bank
-3.0 linked thrift banks surpassed the 1997 1998 1999 2000 2001 2002 2003 2004 industry average at 1.3 percent and 1.0
Thrift Banking Industry Linked TBs Non-Linked TBs percent, respectively. However, foreign bank linked and non-linked thrift
Source: Office of Supervisory Policy Development, Supervision and Examination Sector 53
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004 banks pulled down the average ROA as they registered negative ROA ratios of 3.7 percent and 1.5 percent, respectively.
ROE recovered to positive 0.1 Thrift Banking System percent from negative 0.6 percent last Comparative Return on Equity (ROE) year. Since end-year 2000, the industry 20.0 15.0 has turned in negative ROE ratios except t for this year and the positive 1.5 percent 10.0 5.0
posted at end-year 2002. By subgroup, In Percen 0.0 the ROE of domestic bank-linked thrift -5.0
banks and non-bank linked thrift banks -10.0
exceeded the industry average at 12.3 -15.0 percent and 2.1 percent, respectively. In 1997 1998 1999 2000 2001 2002 2003 2004 contrast, the ROE of foreign bank-linked Thrift Banking Industry Linked TBs Non-Linked TBs and non-linked thrift banks were below industry average at negative 23.5 percent and 8.2 percent, respectively.
MAJOR BALANCE SHEET TRENDS
ASSETS. Total assets of the system aggregated P305.4 billion, higher by 11.4 percent over the previous year’s level of P274.3 billion.
By main group, assets of linked thrift bank group grew by 38.0 percent to P201.3 billion from P145.8 billion last year. In contrast, non-linked thrift banks’ resources contracted by 19.0 percent to P104.1 billion from P128.4 billion. The substantial year-on-year changes were mainly due to the reclassification of 2 non-linked thrift banks, namely Planters DB and Micro Enterprise Bank to linked thrift banks effective October 2004 following the increase in Planters DB’s holdings in Micro Enterprise Bank to 80.0 percent. Thrift Banking System: Balance Sheet Structure
Major Accounts 2000 2001 2002 2003 2004
Total Assets 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % Cash and Due from Banks 11.1 % 8.7 % 8.3 % 8.7 % 8.9 % Interbank Loans Receivable (IBL) 2.7% 2.0% 3.0% 2.2% 2.0% Loans, net 51.5 % 52.3 % 53.6 % 52.9 % 51.2 % Investments, net 12.7 % 13.6 % 14.1 % 15.7 % 18.0 % ROPOA, net 8.6 % 10.3 % 10.3 % 10.2 % 10.8 % Other Assets 13.4 % 13.1 % 10.7 % 10.3 % 9.1 %
Total Liabilities and Capital 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % Deposits 60.2 % 65.4 % 68.2 % 71.9 % 73.2 % Bills Payable 12.7 % 10.3 % 8.9 % 8.1 % 8.5 % Special Financing 0.1% 0.1% 0.1% 0.1% 0.1% Other Liabilities 7.6% 6.5% 6.0% 4.9% 5.2% Capital Accounts 19.4 % 17.7 % 16.8 % 15.0 % 13.0 %
Source: Office of Supervisory Policy Development, Supervision and Examination Sector 54
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
Asset mix shows that loans, net comprised the bulk of the industry’s resources at 51.2 percent or P156.3 billion share (down from 52.9 percent or P145.1 billion last year). Investments, net was a far second at 18.0 percent or P55.0 billion (up from 15.7 percent or P43.0 billion). The other components of assets had the following shares: ROPOA, net at 10.8 percent or P33.0 billion (up from 10.2 percent or P28.0 billion); other assets at 9.1 percent or P27.8 billion (down from 10.3 percent or P28.5 billion); cash and due from banks at 8.9 percent or P27.2 billion (up from 8.7 percent or P23.7 billion); and interbank loans at 2.0 percent or P6.1 billion (down from 2.2 percent or P5.9 billion).
Thrift Banking System: Asset Mix
Loans Loans (net, exclusive of IBL) (net, exclusive of IBL) 52.9% 51.2% Cash & due Cash and due from from banks banks 8.9% 8.7%
ROPOA (net) ROPOA(net) 10.2% 10.8%
IBL 2.2% IBL 2.0%
Other assets Investments (Net) Other assets Investments (Net) 10.3% 15.7% 9.1% 18.0% P274.3 Billion P305.4 Billion December 2003 December 2004
On the other hand, the major source of funding came from deposit liabilities, which accounted for 73.2 percent of total liabilities and capital at P223.7 billion (up from 71.9 percent or P197.2 billion last year). Bills payable and other liabilities followed at 8.5 percent or P25.9 billion (up from 8.1 percent or P22.2 billion) and 5.2 percent or P15.8 billion (up from 4.9 percent or P13.4 billion), respectively. Special financing’s share did not change from last year at 0.1 percent or P0.3 billion. Meanwhile, the share of capital accounts stood at 13.0 percent or P39.7 billion (down from 15.0 percent or P41.2 billion).
Thrift Banking System: Funding Mix
Deposits Deposits 71.9% 73.2%
Bills Bills Payable Payable 8.1% 8.5% Special Special Financing Other Liabilities Capital Accounts Other Liabilities Financing Capital Accounts 0.1% 5.2% 15.0% 4.9% 0.1% 13.0%
P274.3 Billion P305.4 Billion December 2003 December 2004
Source: Office of Supervisory Policy Development, Supervision and Examination Sector 55
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
LOANS. Total loan portfolio, gross expanded by 7.0 percent to P170.7 billion from P159.4 billion last year. Likewise, loans (net of interbank loans) climbed by 7.2 percent to P164.6 billion from P153.5 billion. The growth in loans during the year was the highest annual loan growth recorded since end-year 1998 largely due to substantial loan exposure of the thrift banking industry to the real estate sector. This rate, however, was still lower than the peak of 13.8 percent posted at end-year 1997.
Thrift Banking System Total Loans Outstanding (exclusive of IBL) Annual Growth
2004 7.2% 2003 6.4% 2002 5.4% 2001 6.9%
2000 7.0% 1999 (0.6)%
1998 (5.3)% 13.8% 1997
-12.0 -10.0 -8.0 -6.0 -4.0 -2.0 0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0
In Percent
Linked thrift banks held the majority of total loans, net of interbank loans at 70.9 percent or P116.7 billion share. On the other hand, non-linked thrift banks accounted for the remaining 29.1 percent or P47.9 billion.
Meanwhile, FCDU loans fell by 26.3 percent or US$11 million to US$32 million from US$43 million last year. Linked thrift banks accounted for 75.2 percent or US$24 million of the system’s FCDU loans.
As to economic activity, the Real Estate, Construction, Renting and Business Activities sector still accounted for the highest share in the total loan portfolio, gross at 32.1 percent or P54.7 billion (down from 32.2 percent or P51.4 billion last year). Other Community, Social and Personal Services Activities sector captured the second spot at 15.4 percent or P26.3 billion (up from 10.5 percent or P16.7 billion), followed by the Private Households with Employed Persons sector with 12.7 percent or P21.8 billion (down from 13.2 percent or P21.0 billion). These top three (3) sectors combined accounted for 60.2 percent of the total.
The following chart shows the rest of the industry’s loan exposure to the different sectors.
Source: Office of Supervisory Policy Development, Supervision and Examination Sector 56
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
Thrift banks’ credit exposure to the Thrift Banking System following economic sectors posted substantial Loan Portfolio Structure By Industry Sector year-on-year growth:
December 2003 a) Other Community, Social & Personal 4.0%2.5% 2.7% 3.7% Services Activities – P9.6 billion or 57.4 32.2% 5.0% percent; 8.8% b) Real Estate, Contruction, Renting & Business Activities – P3.3 billion or 6.5 percent; c) Financial Intermediation – P1.1 billion or 26.5 percent; 17.4% 10.5% d) Transportation, Storage & Communication – 13.2% P0.8 billion or 19.7 percent; P159.4 Billion e) Private Households with Employed Persons – P0.8 billion or 3.7 percent; December 2004 4.2% 3.0% 3.0% In contrast, there was a large contraction 3.6% 32.1% in the loan exposure of thrift banks to the 4.9% Wholesale, Retail Trade and Repair of Motor 8.6% Vehicles sector by P6.4 billion or 23.0 percent.
Real estate loans expanded to P51.1
12.5% billion, up by 15.6 percent or P6.9 billion from 15.4% last year’s P44.2 billion. RELs represented 31.0 12.7% percent of thrift banks’ total loan portfolio (TLP), P170.7 Billion net of interbank loans, up from last year’s 28.8 percent. Linked thrift banks accounted for a 2003 2004 hefty 80.5 percent of the industry’s RELs, Real Estate, Renting, Bus. Act. 32.2% 32.1% and Construction whereas non-linked thrift banks held the Other Comm., Social & remaining 19.5 percent. 10.5% 15.4% Personal Serv.Act. Priv. Households with Employed Persons 13.2% 12.7% The bigger block of RELs at P37.6 billion or 73.6 percent was granted for the acquisition of Wholesale, Retail, 17.4% 12.5% Trade & Repair residential units by individual homeowners/ Manufacturing 8.8% 8.6% borrowers. The balance of P13.5 billion or 26.4 Agriculture, Fishery, Hunting & 5.0% 4.9% Forestry percent was held out for the construction and Interbank Loans (IBL) 3.7% 3.6% development of real estate properties for Transportation, Storage and 2.7% 3.0% commercial purposes including infrastructure Communication Financial Intermediation 2.5% 3.0% projects. Others 4.0% 4.2% The ratio of past due RELs to total RELs improved to 13.7 percent from 16.8 percent last year. Similarly, the ratio of past due RELs to TLP (net of IBL) recovered to 4.3 percent from 4.9 percent. By purpose, the past due ratio of residential RELs at 11.2 percent was significantly better than the 20.9 percent ratio of commercial RELs.
Source: Office of Supervisory Policy Development, Supervision and Examination Sector 57
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
Thrift banks continued to be the major provider of automobile loans (ALs) as they accounted for 71.7 percent of the total ALs of the banking industry. Total ALs rose to P35.8 billion or by 9.5 percent or P3.1 billion from P32.7 billion last year. Similarly, the ratio of total ALs to total loan portfolio (TLP), net of interbank loans, inched up to 21.8 percent from last year’s ratio of 21.3 percent.
By main group, linked thrift banks reported higher AL exposure as it held 85.3 percent of the industry’s total ALs while non-linked thrift banks accounted for only 14.7 percent. Meanwhile, credit quality of thrift banks improved as past due ALs to total ALs ratio slid to 6.1 percent from 6.5 percent last year.
Credit Card Receivables (CCRs) climbed to P2.6 billion, up by 6.9 percent or P0.2 billion from P2.4 billion last year. The ratio of total CCRs to TLP (net of IBL), on the other hand, was maintained at 1.6 percent from last year. Non-linked thrift banks accounted for the bulk or 95.6 percent of the overall credit card exposure of the industry while linked thrift banks held the balance of 4.4 percent. The past due CCRs to total CCRs ratio improved to 20.5 percent from 22.9 percent last year.
Based on preliminary data on microfinance-oriented banks, the outstanding loans, gross of microfinance-oriented thrift banks reached P125 million as of end-December 2004. Their NPL ratio stood much lower than the industry average NPL ratio at 6.4 percent whereas their NPL coverage ratio stood higher than the industry average NPL coverage ratio at 83.8 percent.
Preliminary data on the compliance with small and medium enterprises (SME) credit as of end-September 2004 showed that loans to SME remained above the statutory floors of 6 percent (for small enterprises) and 2 percent (for medium enterprises) at 23.6 percent or P30.9 billion and 10.6 percent or P13.9 billion, respectively.
On the other hand, data on the compliance with the agri-agra requirement as of end- June 2004 showed that although the industry exceeded the minimum 10 percent mandatory allocation for agrarian reform credit at 14.3 percent, it undercomplied with the overall 25 percent minimum compliance rate at 22.7 percent as it fell short by 6.58 percent as against the 15 percent agri/other credit compliance requirement.
The NPL ratio of the industry improved to 11.0 percent from 12.1 percent last year. This resulted from the 3.1 percent reduction in NPLs, which was accompanied by a 6.8 percent expansion in total loan portfolio (TLP). Similarly, the non-performing assets (NPA) ratio of the industry recovered to 15.9 percent from 16.2 percent. The 9.0 percent growth in NPAs was outpaced by the 11.0 percent expansion in gross assets. (Table 22)
Foreclosure of mortgages to settle outstanding loans attributed to the decline in NPLs from the previous year. Real and other properties owned or acquired (ROPOA) grew by 19.2 percent to P34.7 billion.
Source: Office of Supervisory Policy Development, Supervision and Examination Sector 58
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
After peaking to 16.4 percent in Thrift Banking System 1998, the NPL ratio of thrift banks NPLs and NPL Coverage Ratio remained almost flat since 2000. From 11.3 In P Billion In Percent 30.0 60.0 percent at end-year 2000, the NPL ratio 50.0 climbed to 12.0 percent at end-year 2001 20.0 40.0 and dropped to 11.6 percent at end-year 30.0 2002. It rose again to 12.1 percent at end- 10.0 20.0 2003 before settling at a low 11.0 percent at 10.0
- 0.0 end-year 2004. The industry, however, 1997 1998 1999 2000 2001 2002 2003 2004 remained vulnerable as its NPL coverage NPLs Loan Loss Reserves NPL Ratio NPL Coverage Ratio ratio continued to contract from a high of 52.8 percent at end-year 2000 to 37.0 percent at end-year 2004.
After settling at a high 17.0 Thrift Banking System percent at end-years 2001 and 2002, the NPAs and NPA Coverage Ratio NPA ratio fell to 16.2 percent at end- In P Billion In Percent year 2003 and further dropped to 15.9 60.0 40.0 percent at end-year 2004. The NPA 50.0 30.0 ratio was higher than the 11.0 percent 40.0 NPL ratio principally due to substantial 30.0 20.0 20.0 ROPOA, which still mustered double- 10.0 digit growth in 2004. Meanwhile, the 10.0 - 0.0 industry needs to raise loss 1997 1998 1999 2000 2001 2002 2003 2004 NPAs NPA Reserves provisioning to reflect the true NPA NPA Ratio NPA Coverage Ratio economic value as the NPA coverage ratio followed a declining trend from a high 24.5 percent at end-year 2000 to a low 17.2 percent at end-year 2004.
Thrift Banking System The distressed assets ratio, a Distressed Assets Ratio broader measure of asset quality, inched
In P Billion In Percent up to 27.6 percent from last year’s ratio of 60.0 35.0 27.4 percent mainly on account of the 50.0 30.0 substantial increase in ROPOA, with a 40.0 25.0 30.0 gross of 19.2 percent. The distressed 20.0 20.0 assets ratio at end-year 2004 was the 10.0 15.0 highest since end-year 1997. 0.0 10.0 1997 1998 1999 2000 2001 2002 2003 2004 NPAs Restructured Loans (Performing) Distressed Ratio By main group, linked thrift banks continued to post a stronger performance with lower NPL and NPA ratios of 7.4 percent and 11.4 percent, respectively, compared to non-linked thrift banks’ 19.6 percent and 24.5 percent. Similarly, linked thrift banks favorably registered higher NPL and NPA coverage ratios of 47.1 percent and 22.6 percent, respectively, compared to non-linked thrift banks’ 28.0 percent and 12.3 percent.
Source: Office of Supervisory Policy Development, Supervision and Examination Sector 59
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
Non-linked thrift banks Thrift Banking System sustained their influence as they Comparative NPL, NPA and Coverage Ratios held the majority or 52.8 percent As of End-December 2004 of the industry’s total NPLs and 52.9 percent of total NPAs. The NPL NPL NPA NPA By Analytical Group Ratio Coverage Ratio Coverage group brought up the average Ratio Ratio NPL and NPA ratios, and consequently weighed down on TOTAL THRIFT BANKS 11.0 37.0 15.9 17.2 the industry’s loan and asset quality. Linked Thrift Banks 7.4 47.1 11.4 22.6
Non-Linked Thrift Banks 19.6 28.0 24.5 12.3
INVESTMENTS. Gross investments increased by 27.7 percent to P55.4 billion from last year’s P43.4 billion. Linked thrift banks accounted for the bigger block of total investments at 74.5 percent or P41.3 billion whereas non-linked thrift banks held the balance of 25.5 percent or P14.1 billion.
Investments in bonds and other debt instruments (IBODI) made up 83.0 percent or P46.0 billion of total investments. The balance of 17.0 percent or P9.4 billion consisted of investments lodged under trading accounts securities (TAS), available for sale securities (ASS) and equity investments in allied undertakings. The majority or 58.1 percent (P31.9 billion) of investments in debt instruments was in government securities, followed by foreign debt instruments at 39.7 percent (P21.8 billion) and by private local issuers at 2.2 percent (P1.2billion).
There was substantial year-on-year increase in foreign investments and government investments by 44.1 percent or P6.7 billion to P21.8 billion and by 17.7 percent or P4.8 billion to P31.9 billion, respectively.
Thrift Banking System DEPOSITS. Deposits generated by Share of Deposits, by Category thrift banks jumped by 13.5 percent or
2004 P26.5 billion to P223.7 billion from P197.2
2003 billion last year. The increase stemmed
2002 from the growth of both peso and foreign 2001 currency deposits by 8.6 percent or P14.9 2000 billion and by 48.8 percent or P11.6 billion, 1999 respectively. 1998 1997 The substantial growth in foreign 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% currency deposits largely came from linked
Domestic Bank-Linked Non-Bank Linked thrift banks, which cashed in on the Foreign Bank- Linked Non-Linked corresponding increase in the remittances of overseas Filipino workers.
Source: Office of Supervisory Policy Development, Supervision and Examination Sector 60
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
Linked thrift banks held 69.5 percent share of total deposits, of which domestic bank- linked thrift banks contributed 95.1 percent. Non-linked thrift banks held the balance of 30.5 percent.
Depositors still preferred the convenience of no fixed tenure savings accounts, which made up the largest slice of total deposits at 61.0 percent. However, savings accounts fell by 8.0 percent from last year to P136.4 billion. On the other hand, time deposits, which retained the second spot at 30.9 percent share, surged by 104.4 percent to P69.1 billion. Thrift banks apparently benefited from the negative publicity surrounding the pre-need industry during the second half of 2004, whose clients sought alternative avenues to lock-in their money for future use. Demand and NOW deposit accounts, which lagged behind with an 8.2 percent share, rose by 20.1 percent to P18.3 billion.
Meanwhile, currency mix consisted of 84.2 percent or P188.3 billion in peso deposits and 15.8 percent or P35.4 billion in foreign currency deposits. Non-interest rate sensitive demand, NOW and savings deposit accounts comprised the biggest block or 77.0 percent (down from 90.2 percent last year) of peso deposits, whereas time deposits accounted for the majority or 72.6 percent (up from 70.2 percent) of foreign currency deposits.
Thrift Banking System: Deposit Mix
PESO DEPOSITS FOREIGN CURRENCY DEPOSITS
December 2003 December 2004 December 2003 December 2004 9.8% 23.0% 27.4% 29.8% 77.0% 90.2%
70.2% 72.6%
P173.4 Billion P188.3 Billion P23.8 Billion P35.4 Billion
Demand/NOW & Savings Deposits Time Deposits
Thrift Banking System CAPITALIZATION. Capital D istribution of C apital, by Analytical C ategory accounts stood at P39.7 billion, reflecting a 3.8 percent decline from 2004 2003 last year’s P41.2 billion. Similarly, the 2002 ratio of capital accounts to total assets 2001 was down to 13.0 percent from 15.0 2000 percent. This ratio has been going 1999 down for five consecutive years 1998 1997 starting from a high 19.5 percent at 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% end-year 1999. Domestic Bank-Linked Non-Bank Linked Foreign Bank- Linked Non-Linked
Source: Office of Supervisory Policy Development, Supervision and Examination Sector 61
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
The lower capitalization from last year was mainly brought about by the substantial reduction in surplus, surplus reserves and undivided profits by 21.2 percent or P1.7 billion, primarily from the unprofitable operations of some non-linked thrift banks. Meanwhile, paid-in capital, which merely grew by 0.5 percent or P0.2 billion, hardly made up for the decline in surplus and undivided profits.
By main group, linked thrift banks held a bigger portion of capital at 51.1 percent as against the linked thrift banks’ 48.9 percent. The market structure of capital below shows that non-linked thrift banks consistently held the majority of the capital base in the past except for this period. This was mainly due to the reclassification of a big non-linked thrift bank, Planters DB and its subsidiary Micro Enterprise Bank to linked thrift banks effective October 2004.
The industry remained solvent as CAR on both solo and consolidated basis settled at 17.9 percent as of end-June 2004. Although lower than the 18.9 percent ratio at end-year 2003 and the 20.6 percent ratio at end-year 2002, this period’s CAR was still above the prescribed minimum ratio of 10 percent. By main group, non-linked thrift banks’ CAR stood higher at 19.9 percent compared to linked thrift banks’ 16.0 percent.
Thrift Banking System: Comparative CAR Under Circular No. 280
Solo Consolidated
End- DecemberEnd- June End- December End- June 2002 20032004 2002 2003 2004
(In P Billion) Tier 1 31.6 29.8 29.2 31.6 29.8 29.2
Tier 2 3.9 3.9 3.7 3.9 3.9 3.7 Deductions 0.1 ...... 0.1 ......
Qualifying Capital 35.4 33.7 32.9 35.4 33.7 32.9
Risk Weighted Assets (RWA) - net 172.1 177.8 183.6 172.1 117.8 183.6
(In Percent) Capital Adequacy Ratio (CAR) 20.6 18.9 17.9 20.6 18.9 17.9
. . . Less than P50 million
There were 18 thrift banks, which failed to comply with the 10 percent benchmark. Anent to the policy of the Bangko Sentral ng Pilipinas to have stronger banks, compliance to the prescribed capital requirements remain a going concern. Moreover, there is still an apparent need to build-up capital since there were only 56 out of the 87 operating thrift banks (or 64.4 percent), which complied with the required minimum amount of capital.
Source: Office of Supervisory Policy Development, Supervision and Examination Sector 62
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
Thrift Banking System: Status of Banks' Compliance with the Minimum Amount of Capital
2000 2001 2002 2003 2004
A. Number of Operating Thrift Banks (TBs) 112 104 94 92 87
Based Within Metro Manila 42 43 43 42 41 Based Outside Metro Manila 70 61 51 50 46
B. TBs with Capital Equal to or in Excess of the 73 67 57 58 56 XXXMinimum Required
Based Within Metro Manila (K> P325M) 35 32 31 32 29 Based Outside Metro Manila (K> P52M) 38 35 26 26 27
SELECTED CONTINGENT ACCOUNTS
Bank guarantees, through the issuance of stand-by letters of credit, stood at P573 million, up by 35.1 percent or P149 million from previous year’s level of P424 million. Non-linked thrift banks held the majority of these bank guarantees with a share of 51.1 percent whereas linked thrift banks held the remaining 48.9 percent. Nonetheless, all bank guarantees came from domestic thrift banks.
Source: Office of Supervisory Policy Development, Supervision and Examination Sector 63
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
RURAL BANKING SYSTEM
OVERVIEW
The rural banking industry, as the main receptacle of BSP’s microfinance programs, remained stable and performed consistently above expectations. The industry’s favorable condition was characterized by much improved profitability, lower cost-to-income ratio and stronger capital base with assets, loans and deposits continuously expanding. In addition, intensified microfinance activities augurs well for the industry’s continuing improvement.
For the year ended 31 December 2004, rural banks earned net income after tax (NIAT) of P1.6 billion, a P0.3 billion increment from P1.3 billion same period last year. (Table 23) Consequently, both ROA and ROE ratios improved to 1.8 percent and 11.6 percent over 2003’s 1.7 percent and 10.6 percent, respectively.
Loan and asset quality also remained strong with the 13.3 percent rise in loan portfolio, gross reaching P58.7 billion from the previous year’s P51.8 billion and further supported by the simultaneous decline in the NPL and NPA ratios to 11.5 percent and 15.1 percent from 12.1 percent and 15.5 percent, respectively.
Liquid assets remained high at P22.9 billion, an increase of 7.8 percent from last year’s P21.2 billion. This represented 34.3 percent (down from 36.0 percent) of deposit liabilities and 24.4 percent (down from 25.2 percent) of total assets. The decline in the ratios was brought on by expansion in deposit liabilities and total assets. (Table 24)
Rural Banking System There was a steady growth in Market Structure of Assets total resources reaching P93.8 billion, higher by 11.7 percent than last year’s 2004 P84.0 billion. Rural banks located in 2003 Luzon continued to hold the bulk of the 2002 industry’s total assets at P67.4 billion or 2001 71.8 percent share. This was followed by
2000 the rural banks in Mindanao at P15.7
1999 billion or 16.7 percent share while the rural banks situated in the Visayas 1998 lagged behind at P10.8 billion or 11.5 1997 percent share. 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Luzon Visayas Mindanao
Source: Office of Supervisory Policy Development, Supervision and Examination Sector 64
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
Total capital accounts reached P14.7 billion, a rise of P1.3 billion from year ago’s P13.4 billion. On regional basis, rural banks situated in CALABARZON (Region IV-A) still lead in terms of the highest assets, loan portfolio, deposit liabilities and capital accounts.
Top Five Regions of Rural Banks Based on Consolidated Statement of Condition as of End- December 2004 p/ (Amounts in P Billion)
Assets Loans
Rank Region Amount Rank Region Amount 1 CALABARZON (Region IV-A) 23.2 1 CALABARZON (Region IV-A) 12.3 2 Central Luzon (Region III) 14.8 2 Central Luzon (Region III) 8.9 3 National Capital Region 9.3 3 National Capital Region 6.0 4 Ilocos (Region I) 7.3 4 Ilocos (Region I) 5.0 5 Central Visayas (Region VIII) 5.7 5 Bicol (Region V) 3.6 Total 60.3 Total 35.8 % Share 64.3 % Share 64.1 83.3 51.4 Deposits Capital Accounts
Rank Region Amount Rank Region Amount 1 CALABARZON (Region IV-A) 18.0 1 CALABARZON (Region IV-A) 3.4 2 Central Luzon (Region III) 10.5 2 Central Luzon (Region III) 2.5 3 National Capital Region 6.9 3 Northern Mindanao (Region X) 1.4 4 Ilocos (Region I) 5.4 4 Ilocos (Region I) 1.0 5 Central Visayas (Region VIII) 4.4 5 National Capital Region 0.9 Total 45.2 Total 9.2 % Share 67.9 % Share 62.6 p/ Preliminary 58.26 13.45
OPERATING NETWORK
The moratorium on granting bank licenses was partially lifted in February 2001 to facilitate the entry of microfinance-oriented banks. Following the implementation of Circular No. 273, the number of microfinance- oriented banks (head office/branches) Rural Banking Offices remained the same with rural bank As of End-December 2004 density reaching 1,897 by end- Branches/ Head Total Other December 2004. The higher number Offices Offices of rural bank offices at 1,897 as of end–year 2004 (from 1,818 at end-year Rural Banks 1,897 720 1,177 2003), consisted of 720 head offices Of which : Microfinance Rural Banks 12 4 8 (down from 721) and 1,177 branches/other offices (up from
Source: Office of Supervisory Policy Development, Supervision and Examination Sector 65
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
1,089). Of the total, there were 4 microfinance oriented rural banks with more than 50 percent of their operations dedicated to microfinance activities while an additional 170 rural banks were engaged, to some extent, in microfinance operations.
Although Bangko Sentral decided to partially lift the moratorium on bank branching, growth in the number of rural banks in the industry is not limited to new rural banks created or established.
Instead, the composition and density of rural banks in the country were characterized by the subsequent establishment, closure, conversion to another category and overall consolidation of the industry.
There was only one rural bank established (Bangko Nuestra Señora del Pilar, Inc., which opened for business on 8 June 2004) throughout the year. Two rural banks, RB of Sto. Domingo (Albay) and RB of Culasi, Inc. (Antique), were closed effective on 8 January 2004 and 22 October 2004, respectively.
Meanwhile, four thrift banks converted to rural banks during the year. Lipa City DB and Batangas DB converted to Lipa Bank, Inc. and Balayan Bay RB on 1 March 2004. First Provincial Bank DB became the First Provincial Bank, Inc. (A Rural Bank) effective 15 April 2004 while Nation Bank, came to be known as Nation Bank, Inc. (A Rural Bank) effective 8 November 2004.
There were two consolidations completed in year 2004. Provident RB of Cotabato, RB of Panabo and Network RB started operations on 1 April 2004 as a consolidated bank known as the One Network Rural Bank, Inc, while Muñoz Rural Bank, Inc., Community RB of Guimba, Inc. and GM Bank, Inc. consolidated into one bank with the latter as the surviving bank effective 1 December 2004.
Overall, National Capital Region together with its contiguous areas of Region III and Region IV-A with 810 offices or 42.7 percent still had the most number of rural bank offices. Northern Luzon area (Region I + Region II + Cordillera Autonomous Region) followed with 349 offices or 18.4 percent while the Visayas region accounted for 289 offices or 15.2 percent. The rest of the rural banks were located in Bicol, MIMAROPA and Mindanao. (Table 25)
RESULTS OF OPERATIONS
The rural banking industry consistently improved its profitability over the last five years. NIAT, from a low of P893 million in year 2000, posted an uptrend to P976 million in year 2001, P1.0 billion in year 2002, P1.3 billion in year 2003 and to a peak of P1.6 billion in year 2004. (Table 26)
Source: Office of Supervisory Policy Development, Supervision and Examination Sector 66
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
The P259 million year-on-year increment in NIAT was brought on by the 14.6 percent increase in net operating income which overtook the 13.8 percent rise in operating expenses.
Net interest income at P6.5 billion continued to be the major source of operating income for the industry. This was P0.9 billion or 16.1 percent higher than last year’s P5.6 billion and comprised 70.5 percent of the total operating income. The large amount of net interest income reflects the industry’s satisfactory loan and asset quality, which can be seen in the higher average net interest margin of 10.7 percent compared to last year’s 10.4 percent.
Meanwhile, the industry managed to further increase its total operating income with the 11.1 percent or P0.3 billion rise in non-interest income. The bulk of which was fee-based income with an 8.2 percent or P0.2 billion increment.
Operating expenses went up by 13.8 percent to P7.7 billion from last year’s P6.8 billion. These consisted mainly of expenses other than write-offs and loss provisions, and amounted to P7.4 billion or 95.8 percent of the total operating expenses during the year.
Classified by region, the most profitable was CALABARZON (Region IV-A) with a NIAT of P277 million, followed by Central Luzon (Region III) with P264 million, Southern Mindanao (Region XI) with P170 million, Northern Mindanao (Region X) with P155 million and Ilocos (Region I) with P131 million. The Autonomous Region of Muslim Mindanao (ARMM) posted the lowest NIAT of P16 million. However, rural banks in the Visayas (Region VIII) incurred a net loss.
The industry continues to offer competitive pricing on deposit liabilities as the average funding cost trailed closely the benchmark 91-day T-bill rate. A sudden shift transpired in 2002 and 2003 with the funding cost getting the upper hand by 180 basis points and 10 basis points, respectively, over the T-bill rate. In 2004, however, it settled back to 6.2 percent vs. the 7.3 percent T-bill rate.
Rural Banking System: Selected Ratios vs. 91-day Treasury Bill Rate
(In Percent) 25.0
20.0 20.3 19.2 19.5 19.0 19.3 15.0 18.2 17.6 17.9 13.1 15.3 10.2 9.9 9.9 10.0 11.0 7.2 6.1 7.3 9.8 10.0 8.7 5.0 8.4 5.4 6.0 6.1 0.0 1997 1998 1999 2000 2001 2002 2003 2004 Earning Asset Yield Funding Cost Treasury Bill Rate (91-day)
Source: Office of Supervisory Policy Development, Supervision and Examination Sector 67
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
The earning asset yield continued to post substantial interest rate differential, although on a declining trend, against the 91-day T-bill rate for the third consecutive year from a high of 12.8 percent in 2002 before settling to 10.6 percent in 2004. This reflected the underlying improvement beginning in 2001 in loan and asset quality.
Meanwhile, the industry exhibited widening interest spread over the last five years between the earning asset yield and the funding cost. From an average of 9.3 percent in 1998, the interest spread gradually increased to 11.7 percent in 2004 as the industry’s lending rates and funding cost remain less sensitive to T-bill rate fluctuations.
The rural bank’s cost- Rural Banking System: Cost-to-Income Ratio efficiency improved, as well, with a (In P Billions) (In Percent) cost-to-income ratio of 80.7 percent, 10.0 100.0 1.4 percentage points lower than year 8.0 80.0 ago’s 82.1 percent. Eight (8) regions 6.0 60.0 out of 17 regions had cost-to-income 4.0 40.0 ratios below the industry average. In 2.0 20.0 terms of the most efficient region, 0.0 0.0 ARMM still led with cost-to-income 1997 1998 1999 2000 2001 2002 2003 2004 ratio of 47.2 percent, followed by Operating Operating Expense Cost to Southern Mindanao (Region XI) at Income (net of bad debt/prov) Income 66.0 percent and Northern Mindanao (Region X) at 66.1 percent. The less efficient regions, on the other hand, were: Eastern Visayas (Region VIII) at 102.5 percent, Bicol Region (Region V) at 91.7 percent; NCR at 88.7 percent and CALABARZON (Region IV-A) at 86.8 percent. Notably, the industry’s cost efficiency ratio was negatively affected by the less efficient regions, which happened to have the bigger market shares. (Table 27)
Rural Banking System With better performance of the Comparative Return on Assets (ROA) industry, both return on assets (ROA) and return on equity (ROE) ratios rose (In Percent) to 1.8 percent and 11.6 percent from 5.0 4.5 2003’s 1.7 percent and 10.6 percent, 4.0 respectively. 3.5 3.0 2.5 2.0 Regionally, the top 5 regions 1.5 1.0 with the highest ROA were: ARMM at 0.5 12.0 percent; Southern Mindanao 0.0 1998 1999 2000 2001 2002 2003 2004 (Region XI) at 4.1 percent; CARAGA at
Industry Luzon Visayas Mindanao 4.0 percent; Northern Mindanao - Region X at 3.7 percent; and Cordillera Autonomous Region at 3.1 percent. On
Source: Office of Supervisory Policy Development, Supervision and Examination Sector 68
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004 the other hand, the Eastern Visayas region (Region VIII) still had the lowest ROA at negative 0.5 percent. Meanwhile, ROA was consistently high in the Mindanao area from 4.5 percent in 2000 to 3.7 percent in 2004 while the ROA ratios of the rural banks in Luzon, which held the bulk of total assets of the industry, were closer to the industry ROA.
Similarly, ROE in the ARMM Rural Banking System region was highest at 31.4 percent. This Comparative Return on Equity (ROE) was followed by Southern Mindanao (In Percent) (Region XI) at 26.6 percent, CARAGA at 20.0 23.0 percent, CAR at 16.7 percent and 18.0 16.0 Central Mindanao (Region XII) at 14.8 14.0 percent. Geographically, it was still 12.0 10.0 Mindanao which posted the highest 8.0 ROE of 16.9 percent while the the ROE 6.0 4.0 of Luzon at 10.2 percent was closer to 2.0 the industry ratio of 11.6 percent. 0.0 1998 1999 2000 2001 2002 2003 2004 Industry Luzon Visayas Mindanao
MAJOR BALANCE SHEET TRENDS
ASSETS. As of end-year 2004, the industry posted an asset growth of 11.7 percent to P93.8 billion from last year’s P84.0 billion. Except for Central Mindanao (Region XII) whose assets declined by P29 million or 1.6 percent, all regions contributed to the P9.8 billion expansion with the following posting higher increments: CALABARZON (Region IV-A) with P1.9 billion or 8.8 percent, NCR with P1.8 billion or 24.8 percent, Central Luzon (Region III) with P1.1 billion or 8.2 percent, Southern Mindanao (Region XI) with P0.9 billion or 25.4 percent and Bicol (Region V) with P0.6 billion or 14.6 percent. These five regions contributed an aggregate P6.4 billion or 65.1 percent to the industry’s total asset growth.
Rural Banking System: Asset Mix
Loans (net) Loans (net) Cash and Due Cash & Due 58.7% 59.5% from Banks from Banks 18.4% 20.2%
ROPOA (net) ROPOA(net) 8.3% 8.1%
Other Assets Other Assets 7.6% 7.9% Investments (Net) Investments (Net) 5.2% 6.1%
P84.0 Billion P93.8 Billion December 2003 December 2004
Source: Office of Supervisory Policy Development, Supervision and Examination Sector 69
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
The major asset component was loans, net with a share of 59.5 percent, up from last year’s 58.7 percent. Loans, net which at end-2004 stood at P55.8 billion was 13.2 percent higher than year ago’s P49.3 billion. Cash and due from banks of P17.2 billion accounted for 18.4 percent of total assets, down from the previous year’s 20.2 percent. This represented a 1.8 percent hike from last year’s P16.9 billion. The rest of the asset mix were: real and other properties owned or acquired (ROPOA), net at 8.1 percent or P7.6 billion (down from 8.3 percent); other assets at 7.9 percent or P7.5 billion (up from 7.6 percent); and investments, net at 6.1 percent or P5.8 billion (up from 5.2 percent).
Rural Banking System: Funding Mix
Deposits Deposits 70.1% 71.0%
Capital Accounts Capital Accounts 15.7% 16.0%
Bills Payable Bills Payable 7.6% 8.2% Other Liabilities Other Liabilities Special Financing 5.5% Special Financing 5.6% 0.2% 0.1%
P84.0 Billion P93.8 Billion December 2003 December 2004
Deposit liabilities still proved to be the most stable source of funds as these accounted for a huge 71.0 percent (or P66.6 billion) share of the industry’s total resources. The rest of the mix was shared by: capital accounts at 15.7 percent (down from 16.0 percent), bills payable at 7.6 percent (down from 8.2 percent) and special financing/other liabilities at 5.7 percent (same as last year). Rural Banking Industry: Balance Sheet Structure
Major Accounts 2000 2001 2002 2003 2004 p/
Total Assets 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % Cash and Due from Banks 18.5 % 18.4 % 18.9 % 20.2 % 18.4 % Loans, net 60.5 % 59.2 % 58.7 % 58.7 % 59.5 % Investments, net 4.1 % 4.8 % 5.1 % 5.2 % 6.1 % ROPOA, net 8.6 % 9.6 % 9.4 % 8.3 % 8.1 % Other Assets 8.3 % 8.0 % 7.9 % 7.6 % 7.9 %
Total Liabilities and Capital 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % Deposits 65.1 % 67.1 % 68.6 % 70.1 % 71.0 % Bills Payable 11.5 % 10.1 % 9.4 % 8.2 % 7.6 % Special Financing 0.3 % 0.2 % 0.2 % 0.2 % 0.1 % Other Liabilities 6.1 % 6.1 % 5.5 % 5.5 % 5.6 % Capital Accounts 17.0 % 16.5 % 16.3 % 16.0 % 15.7 % p/ Preliminary
Source: Office of Supervisory Policy Development, Supervision and Examination Sector 70
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
LOANS. There was a 13.3 percent Rural Banking System or P6.9 billion expansion in the industry’s Loan Portfolio Structure p/ loan portfolio, gross to P58.7 billion from By Industry Sector P51.8 billion last year largely due to December 2003 enhanced microfinance activities and SME 3.6% 2.4% 2.5% lending spurred by improvement in some 2.8% 3.2% economic sectors. Most of the additional 3.7% loans were in the NCR which posted an 41.6% 8.3% increment of P1.3 billion or 27.9 percent. Likewise, Southern Mindanao (Region XI) was able to extend additional loans 12.8% amounting to P1.1 billion or 54.4 percent, while the rest of the large contributors 19.1% included: CALABARZON (Region IV-A) P51.8 Billion with P837 million or 7.3 percent, Central Luzon (Region III) with P584 million, December 2004 CARAGA with P485 million, Ilocos (Region 3.7% 2.6% 2.8% I) with P478 million, Bicol (Region V) with 2.6% 3.7% P436 million and Northern Mindanao 3.8% (Region X) with P411 million. 39.8% 8.9% Microfinance lending continued to progress throughout the year. As of end- December 2004, the 4 microfinance oriented 12.7% rural banks had total loans amounting to P301 million, while the 170 rural banks 19.4% engaged in microfinance activities have P58.7 Billion extended loans totaling P2.8 billion to over 460,000 clients. 2003 2004 Agriculture, Hunting & 41.6% 39.8% The industry’s compliance with the Forestry Wholesale, Retail Trade & 19.1% 19.4% small and medium enterprises (SME) credit Repair as of end-June 2004 also continuously Real Estate, Construction, 12.8% 12.7% Renting & Bus.Activities exceeded the minimum 6 percent (for small Other Community, Social and 8.3% 8.9% enterprises) and 2 percent (for medium Personal Activities Fishery 3.7% 3.8% enterprises) SME credit requirement per Education 3.2% 3.7% R.A. No. 8289, as amended at 41.5 percent or Private Households w/ 2.8% 2.6% P13.2 billion and at 12.2 percent or P3.9 Employed Persons billion, respectively. Manufacturing 2.5% 2.8% Transportation, Storage & 2.4% 2.6% Communication Although percentage lending 3.6% 3.7% Others declined in 2004 the agricultural sector was p/ Preliminary still the main recipient of the industry’s loans amounting to P25.6 billion equivalent to 43.5 percent (down from 45.3 percent last year) of total loans. Notably, loans granted to all sector exhibited growths as shown in the Loan Portfolio Structure chart.
Source: Office of Supervisory Policy Development, Supervision and Examination Sector 71
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
Likewise, as of end-June 2004, the industry more than complied with the minimum 10 percent agrarian reform and 25 percent agricultural credit allocation at 17.6 percent and 29.4 percent, respectively, aggregating to P8.7 billion for agrarian reform beneficiaries and P23.2 billion for agricultural loans in general.
In the last five years, the NPLs Rural Banking System of the industry hovered around a NPLs and NPL Coverage Ratio steady level. From P6.7 billion in In P Billion In Percent 2000, NPLs declined to P6.3 billion in 15.0 50.0
2001, moved up to P6.5 billion in 40.0 10.0 2002, and again dropped to P6.2 30.0 billion in 2003. These finally settled 20.0 back to P6.7 billion in 2004. The NPA 5.0 10.0 levels, on the other hand, showed an - 0.0 uptrend from P12.0 billion in 2000 1997 1998 1999 2000 2001 2002 2003 2004 and reaching P14.6 billion in 2004. NPLs Loan Loss Reserves (Table 28) NPL Ratio NPL Coverage Ratio
Nonetheless, the continued yearly growth in both lending and gross assets, which either surpassed or complemented the increase or decrease in NPLs and NPAs, resulted to improvements in the NPL and NPA ratios. From the 17.4 percentage level in 2000, the industry’s NPL ratio gradually eased down between 2001 and 2003 to finally reach the lowest of 11.5 percent in 2004. This is consistent with Bangko Sentral’s policy of accelerated asset clean-up to make the rural banks stronger and more competitive in their lending activities. Similarly, the industry’s NPA ratio steadily improved from 19.3 percentage level in 2000 and further declined between 2001 and 2003 to finally settle to a low of 15.1 percent in 2004.
Rural Banking System By region, Cagayan (Region NPAs and NPA Coverage Ratio II) had the highest NPL ratio at 17.0 percent, followed by CALABARZON In P Billion In Percent 15.0 30.0 (Region IV-A) at 15.4 percent,
25.0 Western Visayas (Region VI) at 14.0
10.0 20.0 percent, Ilocos (Region I) at 13.5
15.0 percent, MIMAROPA (Region IV-B)
5.0 10.0 at 13.3 percent and Bicol (Region V) at 13.1 percent. In contrast, Southern 5.0 Mindanao posted the lowest ratio at - 0.0 1997 1998 1999 2000 2001 2002 2003 2004 3.8 percent. NPAs NPA Reserves NPA Ratio NPA Coverage Ratio It is notable though that despite the decline in the NPL ratio, the industry exerted efforts to reduce delinquent loans through foreclosures leading to a higher level of ROPOA at P7.9 billion, up by 9.9 percent from P7.2 billion the previous year.
Meantime, settlement of restructured loans (RLs) was also exerted as RLs gross still declined in 2004 by 4.1 percent to P0.6 billion from P0.7 billion in 2003 and P1.1 billion in 2002.
Source: Office of Supervisory Policy Development, Supervision and Examination Sector 72
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
Loan loss provisioning likewise exhibited improvements. NPL coverage ratio maintained a steady growth from 29.3 percent in 2000, 36.4 percent in 2001, 34.9 percent in 2002, 36.1 percent in 2003 and finally peaked at 37.4 percent in 2004. Accordingly, the NPA coverage ratio increased from 18.2 percent in 2003 to 19.0 percent in 2004, the same highest ratio posted in 2001.
The industry also showed a Rural Banking System favorably lower distressed assets Distressed Assets Ratio ratio. From its highest ratio at 29.7 In P Billion In Percent percent in 2000, it gradually fell to 20.0 35.0
22.7 percent in 2004. 30.0 15.0
25.0 Among the 17 regions, 10.0 20.0
ARMM still reported the lowest 5.0 15.0 distressed assets ratio at 7.2 percent 0.0 10.0 (up from 5.8 percent last year). In 1997 1998 1999 2000 2001 2002 2003 2004 NPAs contrast, the highest ratio at 33.2 Restructured Loans (Performing) percent was retained by Distressed Ratio CALABARZON (Region IV-A).
DEPOSITS. Deposit mobilization increased by 13.1 percent to P66.6 billion from last year’s P58.9 billion. The P7.7 billion increment in total deposits can be traced to the P5.5 billion or 13.5 percent growth in saving deposits. Time and demand/NOW deposits likewise contributed P2.2 billion.
Rural Banking System: Deposit Mix Savings and demand/NOW deposits still held the bulk of total PESO DEPOSITS deposits at 72.4 percent (up from 72.0 percent in 2003), while the remaining December 2003 December 2004 27.6 percent (down from 28.0 percent)
28.0% 27.6% was in interest rate sensitive time deposits.
On a regional basis, CALABARZON (Region IV-A) held the 72.0% 72.4% highest level of deposits at P18.0 billion or 27.0 percent of total deposits, P58.9 Billion P66.6 Billion followed by Central Luzon (Region III)
Demand/NOW & Savings Time Deposits at P10.5 billion or 15.8 percent, the Deposits National Capital Region at P6.9 billion or 10.4 percent, Ilocos (Region I) at P5.4 billion or 8.1 percent and Central
Source: Office of Supervisory Policy Development, Supervision and Examination Sector 73
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
Visayas (Region VII) at P4.4 billion or 6.7 percent. These 5 regions comprised 67.9 percent of the total deposit liabilities of rural banks. On the other hand, the ARMM had the smallest share at 0.1 percent.
CAPITALIZATION. Total capital accounts of the industry rose by 9.7 percent to P14.7 billion from last year’s P13.4 billion. Both paid-in-capital and surplus, surplus reserves and undivided profits contributed to the P1.3 billion increment, rising by P0.9 billion or 9.3 percent and P0.4 billion or 10.9 percent, respectively.
However, the 9.7 percent hike in capital accounts was inadequate to buffer the 11.7 percent rise in total assets. This pulled the ratio of total capital accounts to total assets down to 15.7 percent from 16.0 percent at end-year 2003. Since end-year 2001, the expansion in total assets of the industry continuously outpaced the rise in total capital. This led to a downtrend in the ratio of total capital accounts to total assets from its peak at 17.0 percent in 2000 to 15.7 percent in 2004.
Classified by region, CALABARZON still held the biggest share of P3.4 billion or 23.1 percent of total capital, followed by Central Luzon (Region III) at P2.5 billion or 16.9 percent, Northern Mindanao (Region X) at P1.4 billion or 9.6 percent, NCR at P1.0 billion or 6.9 percent and Ilocos (Region I) at P0.9 billion or 6.5 percent. The remaining P5.5 billion or 37.1 percent was held by the remaining 12 regions, of which ARMM had the lowest capital at P74 million or 0.5 percent of total capital accounts.
As of end-June 2004, the capital adequacy ratio (CAR) of the industry declined to 16.2 percent from 16.5 percent at end-year 2003. This ratio was still well above the minimum 10 percent requirement. However, a remaining 130 banks still posted CAR below the 10 percent minimum.
Rural Banking System: Comparative CAR Under Circular No. 280
Solo
End-December End-June
2001 2002 2003 2004 p/
(In P Billion) Tier 1 6.2 9.8 10.8 10.6
Tier 2 0.8 1.0 1.0 1.0
Deductions 0.0 0.1 0.0 0.1
Qualifying Capital 7.0 10.7 11.8 11.5
Risk Weighted Assets (RWA) - net 44.5 64.8 71.5 71.4
(In Percent)
Capital Adequacy Ratio (CAR) 15.7 16.5 16.5 16.2 p / Preliminary
Source: Office of Supervisory Policy Development, Supervision and Examination Sector 74
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
Despite the relatively high industry capital adequacy ratio, there were only 578 banks (or 80.3 percent) out of 720 rural banks which were able to comply with the required minimum amount of capital. Non-compliant banks are deemed to consider the option to consolidate or merge with stronger banks or increase capitalization.
Rural Banking System
Status of Banks' Compliance with the Minimum Amount of Capital As of End-December 2004
A. Number of Operating Banks 720
Rural Banks 11 - Within Metro Manila - With Nationwide Branching 4 - Within the cities of Davao & Cebu 3 - 1st to 3rd cities and 1st class municipalities 241 - 4th to 6th class cities and 2nd to 4th class municipalities 330 - 5th to 6th class municipalities 131
B. Banks with Capital (K) Equal to or in Excess of 578 the Minimum Required Rural Banks - Within Metro Manila (K ³ P26.0M) 9 - With Nationwide Branching (K ³ P20.0M) 1 - Within the cities of Davao & Cebu (K ³ P13.0M) 3 - 1st to 3rd cities and 1st class municipalities (K ³ P6.5M) 203 - 4th to 6th class cities and 2nd to 4th class municipalities (K ³ P3.9M) 264 - 5th to 6th class municipalities (K ³ P2.6M) 98
Source: Office of Supervisory Policy Development, Supervision and Examination Sector 75
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
COOPERATIVE BANKING SYSTEM
OVERVIEW
The cooperative banking industry remained resilient throughout 2004, with positive developments recorded in its underlying fundamentals: higher levels of assets, lending, deposits and capital and marked improvement in earnings with lower cost-to income ratio. Likewise, the industry was able to arrest the deterioration of its delinquency ratio, which remained within the level of the previous year’s ratio.
Cooperative banks posted higher profits as net income after tax (NIAT) for the year ended 31 December 2004 reached P142 million up by 9.9 percent from last year’s P129 million. (Table 29) However, with larger expansion in total assets and capital, return on assets (ROA) ratio leveled at 2.4 percent while return on equity (ROE) was lower at 13.8 percent compared to last year’s 14.4 percent. (Table 30)
Reflecting good credit management, the industry curbed its NPL ratio at 12.0 percent despite expanded lending activities. Similarly, the NPA ratio just slightly increased to 12.8 percent from 12.7 percent last year as foreclosure proceedings were pursued to preserve the industry’s loan quality.
Cooperative Banking System Total resources grew by 13.4 Market Structure of Assets percent reaching P6.4 billion in year 2004 from P5.7 billion in 2003. 2004 Geographically, during the years 1997 2003 and 1998, cooperative banks situated 2002 in Mindanao held most of the 2001 industry’s assets but beginning 1999 2000 the biggest share shifted to 1999 cooperative banks located in Luzon. 1998 As of end-December 2004, 1997 cooperative banks located in Luzon 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% held 63.8 percent market share, while remaining market share went to Luzon Visayas Mindanao cooperative banks in Mindanao (19.7 percent) and Visayas (16.5 percent).
The industry managed to sustain depositors’ confidence as deposit liabilities increased by 13.6 percent to P3.7 billion from last year’s P3.3 billion. Liquid assets to deposits ratio remained adequate at 31.0 percent, notwithstanding the 0.4 percentage point decline from the 31.4 percent last year.
Source: Office of Supervisory Policy Development, Supervision and Examination Sector 76
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
Meanwhile, the industry remained well capitalized as total capital accounts improved by 14.6 percent to P1.1 billion from P1.0 billion last year.
Consistently since end-year 2000, Central Luzon (Region III) led in terms of having the biggest share in assets, loan portfolio, deposit liabilities and capital accounts.
Top Five Regions of Cooperative Banks Based on Consolidated Statement of Condition: As of End-December 2004 p/ (Amounts in P Billion)
Assets Loans
Rank Region Amount Rank Region Amount
1 Central Luzon (Region III) 1.8 1 Central Luzon (Region III) 1.4 2 Northern Mindanao (Region X) 0.7 2 Northern Mindanao (Region X) 0.6 3 Western Visayas (Region VI) 0.5 3 Western Visayas (Region VI) 0.4 4 Cagayan Valley (Region II) 0.5 4 Cagayan Valley (Region II) 0.4 5 Central Visayas (Region VIII) 0.4 5 Central Visayas (Region VIII) 0.3 Total 3.9 Total 3.1
% Share 60.8 % Share 68.4 83.3 51.4 Deposits Capital Accounts
Rank Region Amount Rank Region Amount
1 Central Luzon (Region III) 0.9 1 Central Luzon (Region III) 0.2 2 Western Visayas (Region VI) 0.4 2 Cagayan Valley (Region II) 0.1 3 CALABARZON 0.3 3 Northern Mindanao (Region X) 0.1 4 Central Visayas (Region VIII) 0.3 4 Central Visayas (Region VIII) 0.1 5 Ilocos (Region I) 0.3 5 National Capital Region 0.1 Total 2.2 Total 0.6
% Share 59.1 % Share 54.7 p/ Preliminary 58.26 13.45
OPERATING NETWORK
Efforts to improve the accessibility of cooperative banks remained unimpressive with only 3 new offices added to a total of 106 (composed of 44 head offices and 62 branches) from last year’s 103 (composed of 44 head offices and 59 branches). Throughout the year, no cooperative bank opened, closed or got involved in any merger, consolidation, conversion to other bank category.
By region, Central Luzon had the most number of cooperative banks with 24 banking offices (7 head offices and 17 other offices), followed by Region X – Northern Mindanao with 15 banking offices (4 head offices and 11 other offices). Both Region IV-A – CALABARZON and Region II – Cagayan Region each had 10 banking offices (3 head offices and 7 other offices) while the rest of the regions had less than 10 banking offices. (Table 31)
Source: Office of Supervisory Policy Development, Supervision and Examination Sector 77
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
RESULTS OF OPERATIONS
Consistent improvement in the profitability of the cooperative banking industry was achieved over the last four years. From a low of P17 million in year 2000, NIAT steadily rose to reach P142 million in year 2004. (Table 32)
The 9.9 percent or P13 million growth in earnings from last year’s P129 million was attained on account of improved total operating income, which grew by 13.4 percent or P84 million to P719 million. The increment was driven mainly by non-interest income, which swelled by 17.3 percent, contributing P52 million to the total operating income. Non-interest income mostly are fee-based income also increased by P28 million to P259 million from P231 million last year representing the 74.1 percent share of non-interest income.
Reflecting the strong competition in the loan market, net interest income incurred a marginal increase of 9.9 percent, equivalent to P34 million. The rise in net interest income supported the uptrend that began from a low of P195 million in year 2000, increasing to P266 million in year 2001, P314 million in year 2002, P336 million in year 2003 and finally reaching the peak at P370 million in year 2004. Notably, the industry managed to maintain its net interest margin of 7.9 percent.
Meanwhile, the 14.1 percent or P73 million increment in operating expenses came from bad debts writen-off and provisions for probable losses (P16 million), overhead expenses (P36 million) and other expenses (P21 million).
Cooperative Banking System: Selected Ratios vs. 91-day Treasury Bill Rate
(In Percent)
20.0 16.9 16.4 14.9 15.0 17.2 17.1 11.9 16.3 16.5 15.3 10.9 15.3 13.1 9.9 8.7 10.0 11.5 8.4 10.2 9.9 9.4 10.2 8.8 5.0 7.3 5.4 6.0 0.0 1997 1998 1999 2000 2001 2002 2003 2004 Earning Asset Yield Funding Cost Treasury Bill Rate (91-day)
Matched against the 91-day T-bill rate, funding cost exhibited fluctuating trend from years 1997 to 2001. Funding cost was lower than the 91-day T-bill rate in 1997, 1998 and 2001. This changed in 1999, 2000 and in 2002 up to 2004, when the cost of funds had a premium over the 91-day T-bill rate from as high as 393 basis points in 2002 to as low as 99 basis points in 2000. This premium in 2004 settled at 136 basis points.
Source: Office of Supervisory Policy Development, Supervision and Examination Sector 78
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
Meanwhile, the industry’s earning asset yield ratio was consistently over the 91-day T- bill rate with the interest rate differential ranging from a low 165 basis points in 1998 to as high as 1,165 basis points in 2002 before settling to 918 basis points in 2004. Notably though, the earning asset yield had been hovering around a high level since 1997 as the industry preferred to lend than invest in government securities given its capacity to generate much needed funds.
Likewise, cooperative banks continued to realize wider interest spread since year 2002 as evidenced by the widening gap between the earning asset yield and the funding cost. From a low of 4.0 percent in 2000, it steadily increased to 6.5 percent in 2001, 7.7 percent in 2002 and 7.9 percent in 2003 as both loan and asset quality began to improve since 2001. In 2004, it settled to 7.8 percent as the 30 basis point increase in funding cost overtook the 20 basis point rise in earning asset yield.
Over the past five years, Cooperative Banking System: Cost-to-Income Ratio cost efficiency of the industry (In P Billions) (In Percent) improved as well. From the highest 1.0 100.0 ratio at 95.5 percent in 2000, it 0.8 80.0 steadily declined to 83.2 percent in 0.6 60.0 2001, 83.4 percent in 2002, 79.5 0.4 40.0 percent in 2003 to a low 78.1 percent in 2004. 0.2 20.0 0.0 0.0 Although profitable, the 1997 1998 1999 2000 2001 2002 2003 2004 Operating Operating Expense Cost to industry was not able to register Income (net of bad debt/prov) Income significant improvements in both its ROA and ROE ratios. ROA remained at 2.4 percent while ROE slightly dropped to 13.8 percent from 14.4 percent the previous year. These transpired as the increments in both total assets and total capital were not able to generate the relative level of income compared with that of 2003. Nonetheless, both the ROA and ROE in 2004 still posted a marked improvement over the ratios recorded during the years 2000 to 2002. Cooperative Banking System: Comparative Return on Assets (ROA)
(In Percent)
5.0 4.0
3.0
2.0 1.0 0.0 -1.0
-2.0 -3.0 1998 1999 2000 2001 2002 2003 2004
Industry Luzon Visayas Mindanao
Source: Office of Supervisory Policy Development, Supervision and Examination Sector 79
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
Cooperative Banking System: Comparative Return on Equity (ROE)
(In Percent)
30.0 20.0 10.0 0.0 (10.0) (20.0)
(30.0) (40.0) 1998 1999 2000 2001 2002 2003 2004
Industry Luzon Visayas Mindanao
Cooperative banks in Mindanao posted the highest ROA at 2.8 percent, followed by cooperative banks situated in Luzon with 2.3 percent, while cooperative banks in the Visayas lagged behind with 1.9 percent. Similarly, Mindanao based cooperative banks posted the highest ROE at 14.4 percent, followed by Luzon based cooperative banks at 14.2 percent whereas cooperative banks in the Visayas had only 11.5 percent. (Table 33)
MAJOR BALANCE SHEET TRENDS
ASSETS. The industry stayed resilient as total assets expanded by 13.4 percent aggregating to P6.4 billion from P5.7 billion last year. Except for Bicol (Region V) whose total assets declined by 1.6 percent, all regions contributed to the P758 million increase in resources, with the following regions as top contributors: Central Luzon (Region III) with an increment of P301 million or 20.0 percent, followed by Region II – Cagayan with P87 million or 19.8 percent and the Cordillera Autonomous Region with P49 million or 21.1 percent.
Cooperative Banking System: Asset Mix
Loans (net) Loans (net) Cash & Due 69.9% Cash and Due 70.7% from Banks from Banks 14.8% 14.6%
Other Assets Other Assets 7.4% 6.9%
ROPOA (net) ROPOA(net) 4.2% 4.3% Investments (Net) Investments (Net) 3.7% 3.5% P5.7 Billion P6.4 Billion December 2003 December 2004
Source: Office of Supervisory Policy Development, Supervision and Examination Sector 80
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
Cooperative Banking System: Funding Mix
Deposits Deposits 57.9% 58.0%
Bills Payable Bills Payable 19.1% 19.5%
Special Capital Accounts Special Capital Accounts Financing Other Liabilities 16.9% Financing Other Liabilities 17.1% 0.7% 5.4% 0.6% 4.8% P5.7 Billion P6.4 Billion December 2003 December 2004
The industry prioritized its lending activity, which accounted for the bulk of its asset portfolio. Loans, net comprised 70.7 percent (up from 69.9 percent last year) of total assets, while liquid assets (cash, due from banks and investments, net) had only an 18.1 percent share (down from 18.5 percent). Meanwhile ROPOA, net took a 4.3 percent share (slightly up from 4.2 percent) and the remaining 6.9 percent (down from 7.4 percent) was accounted for by other assets.
Cooperative Banking Industry: Balance Sheet Structure
p/ Major Accounts 2000 2001 2002 2003 2004
Total Assets 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % Cash and Due from Banks 9.6 % 12.3 % 14.5 % 14.8 % 14.6 % Loans, net 73.1 % 73.2 % 70.4 % 69.9 % 70.7 % Investments, net 2.5 % 2.7 % 3.3 % 3.7 % 3.5 % ROPOA, net 5.3 % 4.0 % 4.2 % 4.2 % 4.3 % Other Assets 9.5 % 7.8 % 7.6 % 7.4 % 6.9 %
Total Liabilities and Capital 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % Deposits 43.9 % 50.2 % 55.0 % 57.9 % 58.0 % Bills Payable 33.1 % 25.2 % 22.4 % 19.1 % 19.5 % Special Financing 1.2 % 1.1 % 0.9 % 0.7 % 0.6 % Other Liabilities 10.2 % 6.9 % 5.9 % 5.4 % 4.8 % Capital Accounts 11.6 % 16.6 % 15.8 % 16.9 % 17.1 % p/ Preliminary
Deposit liabilities at P3.7 billion continued to be the main source of funds comprising 58.0 percent (up from 57.9 percent last year) of total liabilities and capital. Other sources were: bills payable at 19.5 percent (up from 19.1 percent) and capital accounts at 17.1 percent (up from 16.9 percent).
Source: Office of Supervisory Policy Development, Supervision and Examination Sector 81
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
Cooperative Banking System LOANS. The strong demand for Loan Portfolio Structure the industry’s lendings resulted to an By Industry Sector increase in its loan portfolio, gross of 14.9 December 2003 percent (P622 million) reaching P4.8 billion. This has been the most significant growth, 2.2% 0.5%1.8% 1.2% compared to the 8.4 percent in 2000, 9.9 2.9% 3.5% percent in 2002, 5.1 percent in 2003, while 38.7% 5.3% the year 2001 experienced a 6.4 percent decline. 15.7% With respect to loan allocation, the Agriculture, Fishery, Hunting and Forestry sector, at P1.8 billion or 38.4 percent (vs. 28.2% 42.2 percent last year), receives the largest P4.2 Billion portion of total outstanding loans to the December 2004 cooperative banking industry. 2.3% 0.8%1.4% 1.5% 3.1% 3.9% With the exception of the Education 6.2% sector which declined by 8.2 percent to P68 34.6% million, all other industry sectors raised their borrowings: Other Community, Social and Personal Services Activities – P236 18.6% million or 36.2 percent; Wholesale, Retail, Trade and Repair – P144 million or 12.3 percent; Agriculture, Fishery, Hunting and 27.6% Forestry – P82 million or 4.6 percent; Real P4.8 Billion Estate, Renting and Business Activities – P77 million or 35.0 percent; Private 2003 2004 Households with Employed Persons – P25 Agriculture, Hunting & 38.7% 34.6% million or 20.8 percent; Manufacturing – Forestry P23 million or 44.4 percent; and Wholesale, Retail Trade & 28.2% 27.6% Repair Transportation, Storage and Other Community, Social and 15.7% 18.6% Personal Activities Communication – P19 million or 88.4 Real Estate, Construction, 5.3% 6.2% percent. This further supported the Renting & Bus.Activities increase in loan portfolio. Fishery 3.5% 3.9% Private Households w/ 2.9% 3.1% Employed Persons After three consecutive years of Manufacturing 1.2% 1.5% decline, the NPLs rose anew by 14.5 Education 1.8% 1.4% percent or P73 million in 2004. This was, Transportation, Storage & 0.5% 0.8% Communication however, matched by the upswing in total 2.2% 2.3% Others loan portfolio, thereby maintaining the 12.0 percent NPL ratio at end-year 2003. Foreclosure proceedings and restructuring, as remedial measures, were intensified as both total ROPOA, gross and restructured loans, reached 13.4 percent and 3.8 percent to P277 million and P129 million, respectively.
Source: Office of Supervisory Policy Development, Supervision and Examination Sector 82
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
Nonetheless, even if there was no improvement in the NPL ratio, this was still at a level lower than the ratios posted during the years 1999 to 2003. In fact, the ratio was 12.4 percentage points lower than its peak at 25.4 percent in 1999. Moreover, the cooperative banking industry’s NPL ratio was lower if not only slightly higher than the delinquency ratios posted by other banking industries, i.e., universal/commercial banks at 14.8 percent, thrift banks at 11.4 percent and rural banks at 11.5 percent.
Geographically, cooperative Cooperative Banking System banks in Mindanao reported the NPLs and NPL Coverage Ratio highest NPL ratio at 20.6 percent as In P Billion In Percent some cooperative banks posted 1.5 50.0 extremely high NPL ratios. This was 40.0 1.0 way above the ratios posted by 30.0
cooperative banks in Luzon and the 20.0 0.5 Visayas at 9.0 percent and 13.2 10.0 percent, respectively. - 0.0 1997 1998 1999 2000 2001 2002 2003 2004 NPLs Loan Loss Reserves The NPA ratio, on the other NPL Ratio NPL Coverage Ratio hand, just inched up to 12.8 percent from 12.7 percent last year. Again, despite the increase, the ratio was still lower than the ratios posted in years 1999 to 2002 with the highest ratio recorded in 1999 at 23.6 percent. (Table 34)
Cooperative Banking System Meantime, progress in loss provisioning slowed down in NPAs and NPA Coverage Ratio 2004. The NPL coverage ratio In P Billion In Percent dropped to 38.2 percent from 39.8 2.0 30.0 percent a year ago. Nonetheless, 25.0 this was more than two and a half 20.0 times the 14.0 percent ratio posted 1.0 15.0 in 1998. Likewise, the NPA 10.0 coverage ratio declined to 26.3 5.0 percent from 27.3 percent, still - 0.0 more than twice the 11.3 percent 1997 1998 1999 2000 2001 2002 2003 2004 NPAs NPA Reserves ratio, recorded in 1998. NPA Ratio NPA Coverage Ratio
On a regional basis, Northern Mindanao (Region X) had the highest NPA ratio at 24.0 percent, followed by Western Mindanao (Region IX) at 19.9 percent, MIMAROPA (Region IV- B) at 18.8 percent, Western Visayas (Region VI) at 17.5 percent, and Southern Mindanao (Region XI) at 17.2 percent. On the other hand, the National Capital Region had the lowest NPA ratio at 4.3 percent.
Source: Office of Supervisory Policy Development, Supervision and Examination Sector 83
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
Considered as a broader Cooperative Banking System definition of asset quality, the Distressed Assets Ratio industry’s distressed assets ratio In P Billion In Percent modestly improved to 19.1 1.5 35.0 percent from 19.4 percent last 30.0 1.0 year and was significantly lower 25.0 from its peak at 31.2 percent at 20.0 0.5 end-year 2000. Consistently, the 15.0 National Capital Region 0.0 10.0 registered the least distressed 1997 1998 1999 2000 2001 2002 2003 2004 assets ratio at 6.2 percent, while NPAs Restructured Loans (Performing) Northern Mindanao (Region X) Distressed Ratio reported the largest ratio at 30.4 percent.
Cooperative Banking System: Deposit Mix DEPOSITS. Funding primarily came from deposit PESO DEPOSITS liabilities reaching P3.7 billion, up by December 2003 December 2004 13.6 percent from P3.3 billion last year. Time deposits accounted for
42.4% 45.9% 53.9 percent (down from 57.1 percent) or P2.0 billion while the remaining 46.1 percent (up from 42.9 percent) or P1.7 billion was in the form of savings deposits.
57.6% 54.1% Central Luzon (Region III) at P945 million or 25.4 percent P3.3 Billion P3.7 Billion consistently held the biggest share of Demand/NOW & Savings Time Deposits total deposit liabilities, followed by Deposits Western Visayas (Region VI) at P433 million or 11.6 percent, CALABARZON (Region IV-A) at P309 million or 8.3 percent, Central Visayas (Region VII) at P299 million or 8.0 percent and Ilocos (Region I) at P295 million or 7.9 percent. On the other hand, Southern Mindanao (Region XI) had the least share at P12 million or 0.3 percent.
CAPITALIZATION. Total capital accounts further improved by 14.6 percent totaling P1.1 billion from P1.0 billion last year. Paid-in capital, which increased by 15.2 percent, largely contributed to the P140 million rise in total capital accounts while the 13.3 percent increment in surplus, surplus reserves and undivided profits provided for the rest.
Among the 17 regions, Central Luzon (Region III) recorded the highest capital of P212 million or 19.4 percent of industry’s total. Trailing behind were: Cagayan (Region II) at P116 million or 10.6 percent, Northern Mindanao (Region X) at P113 million or 10.3 percent, Central
Source: Office of Supervisory Policy Development, Supervision and Examination Sector 84
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
Visayas (Region VII) at P108 million or 9.9 percent and the National Capital Region at P107 million or 9.8 percent.
Cooperative Banking System: Comparative CAR Under Circular No. 280 As of end-June 2004 capital
Solo adequacy ratio (CAR) of the
End-December End-June industry was above the minimum
p/ 10 percent requirement at 14.6 2002 2003a/ 2004 percent, maintaining the end-June (In P Billion) Tier 1 0.6 0.5 0.6 2003 level. The new capital
Tier 2 0.1 0.1 0.2 adequacy ratio of 10 percent,
Deductions 0.0 0.0 0.0 implemented under BSP Circular
Qualifying Capital 0.7 0.7 0.7 No. 280, requires capital charge on Risk Weighted Assets (RWA) - net 3.4 4.6 5.1 the bank’s credit risk. The shift to
(In Percent) risk-based supervision encourages Capital Adequacy Ratio (CAR) 15.4 14.6 14.6 cooperative banks, in step with the a / Data as of end-June 2003 entire banking system, to prudently p / Preliminary manage their risk. Compliance of the cooperative banking industry to minimum capital requirement was relatively satisfactory at 88.6 percent (39 out of 44 banks met the 10 percent CAR requirement). Smaller and weaker banks (22.7 percent or 10 banks) failed to meet the prescribed CAR and verified to be under complied with BSP regulations. Consistent with BSP policy on merger and consolidation, these smaller and weaker banks are seen to merge/consolidate or to increase capitalization in order to compete viably in the industry over the medium term.
Cooperative Banking System Status of Banks' Compliance with the Minimum Amount of Capital As of End- December 2004
A. Number of Operating Banks 39
Cooperative Banks - National Cooperative Bank -
- Within Metro Manila 2
- Cities of Davao and Cebu - - Other Cities - 1st Cooperative bank in province located in a city 37 - Others -
B. Banks with Capital (K) Equal to or in Excess of 44 the Minimum Required
Cooperative Banks - National Cooperative Bank (K ³ P200.0M) - - Within Metro Manila (K ³ P20.0M) 2 - Cities of Davao and Cebu (K ³ P10.0M) - - Other Cities - 1st Cooperative bank in province located in a city(K ³ P1.25M) 42 - Others -
Source: Office of Supervisory Policy Development, Supervision and Examination Sector 85
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
NON-BANKS WITH QUASI-BANKING FUNCTIONS (NBQBS)
OVERVIEW
The NBQBs industry showed significant progress and became stronger as it registered a growth in total assets, halting two consecutive years of downtrend. As of end-year 2004, total assets reached P33.5 billion, up by 16.5 percent from end-2003’s P28.7 billion. (Table 35) Investment houses (IHs) with QB license accounted for P26.7 billion or 79.8 percent of total NBQB assets, while the remaining P6.8 billion or 20.2 percent was held by financing companies (FCs) with QB license.
For the one-year period ended 31 December 2004, the industry remained profitable with a net income after tax (NIAT) of P1.2 billion. However, this was 6.3 percent lower than the P1.3 billion realized in 2003 due to the turnaround from a negative trend to a significant 233.5 percent positive growth in the provisions for income tax resulting to a P0.4 billion slash in net income before tax (NIBT). The increase in provisions for income tax was traced to the rise in net operating income, by a hefty 50.9 percent and the simultaneously 40.9 percent decline in profits from assets sold covered by final transfer tax. Consequently, the return on assets (ROA) ratio slid to 3.9 percent from 4.5 percent and return on equity (ROE) ratio fell to 7.4 percent from 8.0 percent.
Despite the increase in borrowings, NBQBs still remained well capitalized with higher capital-to-assets ratio at 55.1 percent from 52.0 percent last year. (Table 36)
Non-performing loans (NPLs) and non-performing assets (NPAs) both exhibited substantial improvement as their levels went down by 35.7 percent and 16.8 percent, respectively. This led to the decline in both the NPL and NPA ratios to 4.0 percent and 5.5 percent from last year’s 5.8 percent and 7.6 percent, respectively.
OPERATING NETWORK
Philippine Depository and Trust Company started its operation as an NBQB on 25 October 2004. This raised the number of operating NBQB offices to 31 consisting of 12 head offices (6 IHs, 5 FCs and 1 non-bank with QBF function) and 19 branches/other offices. (Schedule 1)
Source: Office of Supervisory Policy Development, Supervision and Examination Sector 86
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
RESULTS OF OPERATIONS
The industry continued to operate profitably in 2004 as NIBT exhibited an 18.0 percent growth reaching P1.7 billion from P1.4 billion last year. However, NIAT declined by 6.3 percent to P1.3 billion as provisions for income tax ballooned to P489 million, 233.5 percent higher than the P147 million last year. (Table 37)
The provisions for income tax were largely influenced by the rise in taxable income, i.e., net operating income by a hefty 50.9 percent to P1.3 billion from P0.9 billion last year. Simultaneously, profits from assets sold, which were already subjected to payment of final transfer tax, declined by 40.9 percent to P204 million from P345 million last year. As a result, the revenue generated from these extraordinary transactions not subject to corporate income tax contributed only to 11.9 percent of NIBT as compared to last year’s 23.8 percent share.
The decline in NIAT pushed ROA and ROE down to 3.9 percent (from 4.5 percent last year) and 7.4 percent (from 8.0 percent), respectively.
The bulk of the industry’s total operating income came from IHs at P1.8 billion (or 78.6 percent) and the balance of P500 million (or 21.4 percent) was contributed by FCs. Leasing income as the primary source of FC’s revenues reached P485 billion or 97.0 percent of total operating income. Meanwhile, the IHs revenues were mostly fee-based income (P659 million or 35.9 percent of total operating income) followed by trading income (P572 million or 31.1 percent) and net interest income (P539 million or 29.4 percent).
Net interest income (inclusive of leasing income) largely contributed to the 17.6 percent or P0.3 billion rise in total operating income, expanding by 24.4 percent to P1.0 billion from P0.8 billion last year. Improvement in loan and asset quality, manifested by higher average net interest margin of 6.0 percent compared to year ago’s 5.0 percent, was instrumental in the rise of net interest income. Similarly, non-interest income rose by 13.0 percent accounting for the P0.1 billion increment in total operating income. Both fee-based income and trading income were becoming stable sources of revenues reaching an aggregate of P1.3 billion from P0.9 billion last year.
On the other hand, earnings from extraordinary activities decreased in 2004 to P369 million equivalent to 21.6 percent (down from 38.7 percent in 2003) of net income before tax. A significant portion of these extraordinary activities consisted of profits realized from assets sold amounting to P204 million, down by 40.9 percent from P345 million in 2003. In addition, other extraordinary credits declined by 40.4 percent to P107 million from P180 million.
Operating expenses dropped by 9.2 percent to P1.0 billion from P1.1 billion last year. This was on account of the 13.7 percent reduction in overhead and other operating expenses to P0.9 billion from P1.1 billion. This more than offset the P47 million increase in loss provisioning in 2004.
Source: Office of Supervisory Policy Development, Supervision and Examination Sector 87
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
Comparing with the 91-day T-bill rate trend, the funding cost of NBQBs was lower than the 91-day T-bill rate in years 1999, 2001and 2004 with the interest spread ranging from a high 306 basis points in 1999 to a low of 4 basis points in 2001. The negative effect of the financial predicament of certain IHs brought into the limelight in 2000, with the closure of another IH with QB function (i.e., East Asia Capital Corporation) on 26 June 2003, put pressure on the NBQB industry. This placed a premium on the borrowing activities of NBQBs over the 91-day T-bill rate in 2000, 2002 and 2003 with the interest rate differential ranging from a high 226 basis points in 2000 to a low 16 basis points in 2003. The NBQBs appeared to have regained public confidence as the 91-day T-bill rate took the upper hand in 2004 by 134 basis points interest spread over the funding cost.
Non-Banks with Quasi-Banking Functions (NBQBs) Selected Ratios vs. 91-day Treasury Bill Rate
(In Percent) 30.0 28.4 25.0 18.1 20.0 14.7 15.0 10.7 12.1 10.6 10.2 9.9 8.5 10.0 6.9 7.3 7.1 9.9 9.8 6.2 5.0 6.0 5.4 6.0 0.0 1999 2000 2001 2002 2003 2004 Earning Asset Yield Funding Cost Treasury Bill Rate (91-day)
Meanwhile, the earning asset yield ratio continued to be above the 91-day T-bill rate with the interest rate differential ranging from a low of 251 basis points in 2003 to as high as 1,855 basis points in 2000 settling to 328 basis points in 2004.
The improvement in loan and asset quality, in addition to the higher interest rates in 2004, raised the interest spread to 4.6 percent, up from 2.4 percent in 2003.
Non-Banks with Quasi-Banking Functions (NBQBs) Industry-wide cost reduction Cost-to-Income Ratio measures were effective as cost-to- (In Percent) (In P Billions) income ratio fell to its lowest since 5.0 80.0 1999 at 39.8 percent. The 4.0 60.0 improvement was brought on by the 3.0 40.0 9.2 percent decline in operating 2.0 expenses (exclusive of write-offs/ loss 20.0 1.0 provisions) complemented by the 17.6
0.0 0.0 percent rise in operating income. This 1999 2000 2001 2002 2003 2004 Operating Operating Expense Cost to ratio was far below the peak ratio at Income (net of bad debt/prov) Income 70.7 percent in year 2000.
Source: Office of Supervisory Policy Development, Supervision and Examination Sector 88
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
MAJOR BALANCE SHEET TRENDS
ASSETS. From a continuous decline after end-year 2001, total assets rebounded, reaching P33.5 billion at end-year 2004, an increment of 16.5 percent from P28.7 billion at end- year 2003.
The P4.8 billion increase in total assets led to corresponding upswing in investments, net by 77.7 percent or P5.9 billion. This, together with the expansion in ROPOA, net by 2.6 percent or P35 million, compensated for the decline in all other asset accounts: cash and due from banks by 20.6 percent or P388 million, interbank loan receivables by 32.2 percent or P499 million and loans, net by 0.3 percent or P41 million.
One IH which held 46.5 percent of the industry’s total assets and which had a year-on- year asset growth of P6.8 billion, contributed largely to the increase in total resources. The same IH whose investments (59.6 percent of the industry’s total investments) rose by P5.1 billion also influenced the rise in the NBQB’s investments to P13.5 billion.
At end-year 2004, the share of investments, net to total assets rose to 40.3 percent from 26.4 percent at end-year 2003. On the other hand, the share of all other major asset accounts to total assets declined: loans, net (34.9 percent from 40.9 percent); cash and due from banks (4.5 percent from 6.6 percent); ROPOA, net (4.1 percent from 4.6 percent); interbank loans receivables (3.1 percent from 5.4 percent); and other assets (13.1 percent from 16.2 percent).
Non-Banks with Quasi-Banking Functions (NBQBs): Balance Sheet Structure
Major Accounts 2000 2001 2002 2003 2004
Total Assets 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % Cash and Due from Banks 5.8% 3.6% 3.3% 6.6% 4.5% Interbank Loans Receivable (IBL) 2.1% 6.0% 5.3% 5.4% 3.1% Loans, net 29.9 % 34.4 % 25.3 % 40.9 % 34.9 % Investments, net 22.0 % 23.3 % 32.4 % 26.4 % 40.3 % ROPOA, net 7.6% 7.5% 6.0% 4.6% 4.1% Other Assets 32.6 % 25.2 % 27.7 % 16.2 % 13.1 % Total Liabilities and Capital 100.0% 100.0% 100.0% 100.0% 100.0% Liabilities 54.4 % 58.6 % 45.8 % 42.3 % 51.6 % Bills Payable 38.8 % 39.3 % 28.5 % 36.1 % 45.0 % Deposit Substitutes 12.9 % 7.1% 13.3% 11.4 % 33.3 % Others 25.9 % 32.2% 15.2% 24.8 % 11.7 % Other Liabilities 15.6 % 19.3 % 17.3 % 6.2 % 6.6 % Total Capital Accounts 45.6 % 41.4 % 54.2 % 57.7 % 48.4 % Capital Stock 14.7 % 14.1 % 18.2 % 30.0 % 26.7 % Surplus, Surplus Reserves & Undivided Profits 30.9 % 27.3 % 36.0 % 27.7 % 21.7 %
Source: Office of Supervisory Policy Development, Supervision and Examination Sector 89
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
Notwithstanding the decline in cash and due from banks, the liquidity of the industry improved as net investments increased. The ratio of liquid assets to bills payable reached 76.8 percent, the highest ratio recorded since end-year 2000. In contrast, total loans to bills payable fell to 89.1 percent from 137.2 percent last year.
LOANS. Total loans, Non-Banks with Quasi-Banking Functions (NBQBs) gross declined by 5.8 percent to NPLs and NPL Coverage Ratio P13.4 billion from P14.2 billion as of In P Billion In Percent 2.0 140.0 end-year 2004. The NPLs posted a 120.0 much bigger decline at 35.7 percent 100.0 80.0 (P534 million from P831 million last 1.0 60.0 year) leading to improved NPL 40.0 ratio of 4.0 percent from last year’s 20.0 5.8 percent. (Table 38) - 0.0 1999 2000 2001 2002 2003 2004 NPLs Loan Loss Reserves Further, the 30.0 percent NPL Ratio NPL Coverage Ratio decline in loan loss reserve to P0.7 billion from P1.0 billion last year was outpaced by the 35.7 percent drop in NPLs. This raised the NPL coverage ratio to 124.8 percent from the previous year’s 114.6 percent.
Declining NPL ratio was mainly due to loan restructuring as gross restructured loans increased by 7.9 percent to P0.4 billion from P0.3 billion last year.
Non-Banks with Quasi-Banking Functions (NBQBs) As both NPLs and ROPOA NPAs and NPA Coverage Ratio declined in 2004, the NPA ratio
In P Billion In Percent likewise improved to 5.5 percent from 6.0 60.0 7.6 percent last year. However, the NPA coverage ratio slowed down to 4.0 40.0 46.0 percent from 53.6 percent, though still 21.4 percentage points 2.0 20.0 higher than the lowest ratio at 24.6
- 0.0 percent posted at end-year 2000. A 1999 2000 2001 2002 2003 2004 reduction in the loss provision for NPAs NPA Reserves NPA Ratio NPA Coverage Ratio ROPOA by 23.5 percent resulted to the downturn.
However, the NPA coverage ratio slowed down to 46.0 percent from last year’s 53.6 percent mainly because of the 23.5 percent reduction in the loan loss provision for ROPOA. Notably though, it is still 21.4 percentage points higher than the 24.6 percent level recorded in 2000.
LIABILITIES. Funding was generated mainly by bills payable, which increased by 45.0 percent to P15.1 billion from P10.4 billion last year. Deposit substitutes, likewise, held the bulk (P11.1 billion or 74.1 percent) of total bills payable.
Source: Office of Supervisory Policy Development, Supervision and Examination Sector 90
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
Other liabilities also provided additional funds amounting to a total of P2.2 billion, most of which were advances from stockholders.
CAPITAL ACCOUNTS. Total capital accounts of NBQBs stood at P16.2 billion, down by 2.2 percent from P16.6 billion last year. This came about primarily from the lower surplus, surplus reserves and undivided profits, which were down by 8.6 percent or P680 million to P7.3 billion from P8.0 billion last year. This was partly offset by additional paid-in capital of 3.7 percent to P8.9 billion from P8.6 billion.
With lower capital accounts and the simultaneous expansion in total assets, NBQBs posted capital to total assets ratio of 48.4 percent, down from 57.7 percent at end-year 2003.
Capital infusion by stockholders was still an important source of funds, as paid-in capital comprised 55.1 percent of total capital accounts from 52.0 percent last year.
Source: Office of Supervisory Policy Development, Supervision and Examination Sector 91
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
NON STOCK SAVINGS AND LOAN ASSOCIATIONS (NSSLAS)
OVERVIEW
Although at a slower pace, the industry continued to grow in 2004 in terms of total assets, loans and capital accounts. The industry also posted favorable solvency and liquidity ratios. However, loan and asset quality remained a major concern since 2003 as little progress was made in addressing non-performing accounts.
Despite limited source of funds from association members, total assets grew reaching P66.9 billion from P61.4 billion last year. However, the growth in resources continued to slow down, from a high of 26.6 percent in 2000 to a low of 9.0 percent in 2004. Similarly, although total capital accounts increased by 8.0 percent to P59.0 billion from P54.6 billion last year, this was the lowest increment recorded since year-end 2000.
Adequate liquidity was maintained as both cash and due from banks and liquid assets accounted for 113.2 percent (down from 128.5 percent) and 202.3 percent (down from 260.5 percent), respectively, of total deposits. The decline in these ratios can be attributed to the growth in total deposits outpacing the rise in both cash and due from banks and liquid assets.
Total capital continued to be the main source of funding, as it comprised 88.2 percent of total resources. Despite the decline from last year’s 89.0 percent, the ratio was still better than the ratios posted in years 2000 to 2002. (Table 39)
Loan portfolio, gross further increased by 14.0 percent to P59.4 billion from P52.1 billion a year ago and credit quality improved as non-performing loans (NPL) ratio declined to 15.3 percent from 16.7 percent last year. This influenced the asset quality, which came out better this period as the non-performing assets (NPA) ratio settled to 12.8 percent from 14.1 percent.
Even as the NPL and NPA ratios declined at end-year 2004, the concern over the credit and asset quality of the industry remained, as these ratios were still exceptionally higher than the lowest ratios posted at end-year 2002. The NPL ratio was significantly higher by 9.2 percentage points from 6.1 percent at end-year 2002, while the NPA ratio was more than twice the 5.5 percent at end-year 2002.
OPERATING NETWORK
As of end-year 2004, the number of NSSLA stood at 120 offices (83 head offices and 37 branches), up from the 118 offices (85 head offices and 33 branches) at end-year 2003. (Schedule 1)
Source: Office of Supervisory Policy Development, Supervision and Examination Sector 92
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
During the year, two (2) NSSLAs were established namely: Public Safety SLA, Inc. and Philippine Coast Guard SLA, Inc., while four (4) NSSLAs ceased to operate, i.e., J.C. Cunanan & Co. SLA, Inc., Magasco SLA, Inc., Police SLA, Inc. and Mondragon SLA, Inc.
MAJOR BALANCE SHEET TRENDS
ASSETS. Although at a slower pace than in previous years, the total resources of the NSSLA industry continued to grow by 9.0 percent to P66.9 billion from P61.4 billion last year. Cash and due from banks, loans, net and other assets grew by 7.7 percent, 10.8 percent and 42.5 percent, respectively, offsetting the combined 23.9 percent decline in ROPOA and investments, net.
The industry focused on the credit needs of its members as loans, net accounted for P53.2 billion or 79.6 percent share of total assets (up from 78.3 percent at end-year 2003). Meanwhile, liquid assets (cash and due from banks and net of investments) were also prioritized, comprising the second largest asset share at P9.7 billion or 14.5 percent. The rest of the asset mix were: other assets at P3.7 billion or 5.5 percent and ROPOA, net at P0.3 billion or 0.4 percent.
Non-Stock Savings and Loan Associations (NSSLAs): Balance Sheet Structure
Major Accounts 2000 2001 2002 2003 2004
Total Assets 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % Cash and Due from Banks 7.5 % 7.1 % 6.3 % 8.2 % 8.1 % Loans, net 80.9 % 79.0 % 80.3 % 78.3 % 79.6 % Investments, net 4.8 % 6.5 % 7.2 % 8.4 % 6.4 % ROPOA, net 1.2 % 0.5 % 0.6 % 0.8 % 0.4 % Other Assets 5.6 % 7.0 % 5.7 % 4.2 % 5.5 %
Total Liabilities and Capital 100.0% 100.0% 100.0% 100.0% 100.0% Liabilities 15.6 % 13.8 % 12.1 % 11.0 % 11.8 % Deposits 5.1 % 7.4 % 6.8 % 6.4 % 7.2 % Bills Payable 1.9 % 0.8 % 0.7 % 0.6 % 0.6 % Other Liabilities 8.6 % 5.7 % 4.7 % 4.0 % 4.0 % Capital Accounts 84.4 % 86.2 % 87.9 % 89.0 % 88.2 % Paid-In Capital 78.2 % 78.9 % 78.6 % 80.7 % 80.5 % Surplus and Reserves 6.2 % 7.3 % 9.3 % 8.3 % 7.6 %
Meanwhile, on a per entity basis, the Armed Forces & Police SLA and AIR Materiel Wing SLA comprised a combined share of 75.4 percent of the total resources of the NSSLA industry. These 2 NSSLAs also contributed a combined 58.0 percent of the P5.5 billion year- on-year growth in the industry’s total assets.
Source: Office of Supervisory Policy Development, Supervision and Examination Sector 93
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
Total liabilities of the industry at P7.9 billion accounted for only 11.8 percent (up from P6.8 billion or 11.0 percent last year) of total fund sources. These were mostly in the form of deposit liabilities amounting to P4.8 billion from P3.9 billion last year and were kept at a low level at 7.2 percent of total funding sources.
Most of the industry’s funds came from contributions of association members as capital accounts rose to P59.0 billion from P54.6 billion last year. Paid-in capital comprised 91.3 percent share of total capital accounts while the remaining 8.7 percent share were surplus and reserves.
LOANS. Lending activities of the industry further expanded as total loan portfolio grew by 14.0 percent to P59.4 billion from P52.1 billion last year. Out of the 83 NSSLAs, 51 or 61.5 percent posted expansion in their loan portfolio while only 25 or 30.1 percent recorded a decline. The remaining 7 NSSLAs or 8.4 percent maintained their loan levels.
Consistently, the combined Armed Forces & Police SLA and AIR Materiel Wing SLA held more than ¾ of the industry’s total loan portfolio accounting for the 78.2 percent share by end-year 2004.
Non-Stock Savings and Loan Associations (NSSLAs) Loan quality improved as the NPLs and NPL Coverage Ratio NPL ratio declined to 15.3 percent In P Billion In Percent from last year’s 16.7 percent. 10.0 100.0 However, this was still remarkably 8.0 75.0 higher than the single digit ratios 6.0 posted at end-year 2002 and 50.0 4.0 preceding years. The NPLs were 25.0 2.0 influenced by the extremely high - 0.0 NPLs posted by a few NSSLAs. 1999 2000 2001 2002 2003 2004 Although improving compared to last NPLs Loan Loss Reserves NPL Ratio NPL Coverage Ratio year’s ratio, extremely high NPLs of a few NSSLAs dragged the overall ratio from further improvement.
Likewise, the NPA ratio Non-Stock Savings and Loan Associations (NSSLAs) also improved to 12.8 percent from NPAs and NPA Coverage Ratio 14.1 percent last year but was still In P Billion In Percent more than twice the single-digit 10.0 100.0 8.0 ratios recorded at end-year 2002 75.0 6.0 and prior years largely due to the 50.0 disposal of foreclosed properties as 4.0 25.0 gross real and other properties 2.0 owned or acquired (ROPOA) - 0.0 1999 2000 2001 2002 2003 2004 declined in 2004 by 43.8 percent to NPAs NPA Reserves P0.3 billion. NPA Ratio NPA Coverage Ratio
Source: Office of Supervisory Policy Development, Supervision and Examination Sector 94
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
Nonetheless, the industry compensated for this high number of bad loans with higher loss provisioning. The NPL coverage ratio rebounded to 67.6 percent from a low of 46.0 percent posted at end-year 2003. However, this was still 17.3 percentage points short than the highest ratio at 84.9 percent posted at end-year 2002. Similarly, the NPA coverage ratio was also enhanced to 65.6 percent from last year’s 43.5 percent. Since end-year 1999, this ratio ranked second to the highest at 76.6 percent ratio recorded at end-year 2000. (Table 40)
DEPOSITS. Although deposit liabilities expanded by 22.3 percent to P4.8 billion from P3.9 billion last year, their share to total funding sources at 7.2 percent remained at single-digit level. This indicates that association members have little funds to spare for deposits.
CAPITALIZATION. Substantial funding continued to come from capital accounts which at end-year 2004 stood at P59.0 billion, up by P4.4 billion or 8.0 percent from end-year 2003. Capital accounts consistently remain the primary source of funds hovering from 80.0 percent to 90.0 percent of total liabilities and capital. In 2004, the increment in capital accounts all came from members’ capital contributions as surplus and reserves inched down by 0.1 percent to P5.1 billion.
The industry’s total capital accounts-to-total assets ratio remained high even as the ratio inched down to 88.2 percent from 89.0 percent last year. This developed as the 9.0 percent rise in total assets outpaced the 8.0 percent increase in total capital accounts.
Source: Office of Supervisory Policy Development, Supervision and Examination Sector 95
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
OFFSHORE BANKING SYSTEM
OVERVIEW
The offshore banking system’s total resources registered growth for the second consecutive year after recovering from the slump in 2002. As of end-December 2004, total resources were higher by US$201 million or 33.3 percent to US$805 million from US$604 million same period last year. Net income after tax (NIAT) for 2004 reached US$5 million, although lower by US$1 million or 16.7 percent over the same period last year at US$6 million. (Tables 41 and 42)
With the merger of Credit Agricole Indosuez and Credit Lyonnaise to CALYON Corporate and Investment Bank in March 2004, there were nine (9) remaining offshore banking units (OBUs) operating in the country consisting of 5 originating from Europe, 3 from America and 1 from Asia. This number was seven (7) Units less than the sixteen (16) OBUs operating at end-year 1997.
RESULTS OF OPERATIONS
Operating income in 2004 was maintained at US$19 million, with non-interest income and net interest income contributing 52.6 percent (US$10 million) and 47.4 percent (US$9 million), respectively. However, operating expenses went up by 16.7 percent or US$2 million to US$14 million. Overhead expenses remained at US$4 million but other expenses increased Offshore Banking System: Cost-to-Income Ratio by 28.6 percent or US$2 million; thus, NIAT slipped by US$1.0 to US$5 (In P Billions) (In Percent) million. 50.0 90.0 45.0 80.0 40.0 70.0 The level of operating income 35.0 60.0 30.0 remained the lowest since 1997 with 50.0 25.0 40.0 the gradual decline in the number of 20.0 15.0 30.0 operating OBUs, reflective of the 10.0 20.0 5.0 10.0 increasing consolidation of financial 0.0 0.0 institutions in the global setting. 1997 1998 1999 2000 2001 2002 2003 2004 Meantime, the rise in operating Operating Operating Expense Cost to Income (net of bad debt/prov) Income expenses has not been contained resulting to a higher cost-to-income ratio by 13.5 percentage points to 71.4 percent from 57.9 percent last year.
With less operational efficiency, the return on assets (ROA) ratio was slightly lower at 0.7 percent from 1.0 percent last year.
Source: Office of Supervisory Policy Development, Supervision and Examination Sector 96
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
MAJOR BALANCE SHEET TRENDS
As the industry is restricted from obtaining funds from the public, the due to head office/other branches continued to be the main source of funding. This amounted to US$550 million and accounted for 68.3 percent of the system’s total liabilities. This was higher by 48.6 percent or US$180 million from end-December2003. Likewise, interbank borrowings, the second biggest source of funding grew by 8.8 percent to US$210 million from US$193 million. On the other hand, deposits of non-residents other than banks declined by 15.4 percent or US$4 million to US$22 million from US$26 million.
Funds were primarily channeled to resident borrowers (US$212 million), invested in bonds and other securities (US$474 million) and lent to local banks, including the Bangko Sentral ng Pilipinas (US$130 million). These were 24.0 percent, 53.7 percent and 14.7 percent, respectively, of gross assets.
Apparently, OBUs preferred to place their funds in investment in less risky government bonds and other securities as the account continued to soar by 120.5 percent or US$259 million to US$474 million. However, 92.6 percent or US$439 million of these funds was placed in bonds and other securities issued by non-residents. The amount exceeded by 107.1 percent or US$227 million the US$212 million gross loans of resident borrowers. Only 7.4 percent or US$35 million were invested in bonds and other securities issued by resident- issuers.
On the other hand, due from other banks fell by 23.4 percent or US$40 million to US$131 million from US$171 million. Likewise, loans, gross declined further by 9.2 percent or US$26 million to US$256 million from US$282 million.
Offshore Banking System: Selected Asset Accounts
In US$ Million In US$ Million In US$ Million 300 500 500 439 254 450 250 450 400 400 439 350 200 187 350 300300 144 212 150 250250 212 200 200 130 100 150 130 150 100 35 50 28 28 10050 35 27 44 50 44 0 1 0 0 Due from1 Loans Inv't in Bonds/ Due from Banks Loans Inv't in Bonds/ Due fromBanks Banks Loans Inv't in Bonds/ Securities Securities Securities
In the Phils. (Resident) Outside the Phils. (Non-Resident) December 2003 December 2004
Resident borrowers continued to be the main beneficiaries of lending activities of OBUs as their aggregate loans of US$212 million comprised 82.8 percent (vs. US$254 million
Source: Office of Supervisory Policy Development, Supervision and Examination Sector 97
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004 or 90.1 percent last year) of the industry’s gross loans. The remaining US$44 million or 7.2 percent (vs. US$28 million or 9.9 percent) were lent to non-resident borrowers. Evidently, while loans to residents continued to fall, those to non-residents even rose by 57.1 percent or US$16 million.
The Manufacturing sector still Offshore Banking System held the biggest share in total loans at Loan Portfolio Structure 36.8 percent or US$78 million (from By Industry Sector year ago’s 47.6 percent or US$121 2003 million. The Transportation, Storage 13.7% and Communications sector followed 2.1% with 16.0 percent or US$34 million 2.8% (from 17.0 percent or US$43 million). 47.6% 5.0% The Electricity, Gas and Water sector came in third with 14.6 percent or US$31 million (from 11.8 percent or 11.8% US$30 million). 17.0% $ 254 Million The rest of the industry sectors and their share in the loan portfolio 2004 were: Agriculture, Fishery and Forestry sector – 4.7 percent or US$10 million 23.7% (from 2.1 percent or US$5 million, 36.8% Financial Intermediation sector – 3.3 4.7% percent or US$7 million, (from 2.8 3.3% percent or US$7 million) and Mining and Quarrying sector – 0.9 percent or 0.9% US$2 million (from 5.0 percent or US$13 14.6% 16.0% million). $ 212 Million
2003 2004 As to remaining maturity, 40.1 percent or US$85 million of the total loans to residents were short-term; 37.8 Manufacturing 47.6% 36.8% Transportation, Storage & percent or US$80 million were long- Communication 17.0% 16.0% term and 22.1 percent or US$47 million Electricity, Gas & Water 11.8% 14.6% were medium-term. Agriculture, Hunting & Forestry 2.1% 4.7%
Financial Intermediation 3.3% 2.8% Mining and Quarrying 5.0% 0.9% Others 13.7% 23.7%
Source: Office of Supervisory Policy Development, Supervision and Examination Sector 98
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
TRUST OPERATIONS
OVERVIEW
As of end-December 2004, total assets of the 56 trust-licensed institutions (33 universal/commercial banks, 14 thrift banks and 9 investment houses) aggregated to P812.8 billion. Trust assets grew by 15.0 percent or P105.8 billion from last year’s P707.0 billion, more than one and half times the growth rate of assets of the Philippine banking system.
Universal and commercial banks still dominated the market and held about 96.0 percent or P780.7 billion (vs. P680.7 billion last year). Thrift banks held a mere 3.1 percent or P25.0 (vs. P19.3 billion), while investment houses’ share was an insignificant 0.9 percent or P7.2 billion (vs. P7.0 billion). (Schedule 4)
Trust System: Market Structure of Assets
Universal and Conmercial Universal and Conmercial Banks Banks 96.3% 96.0%
NBFIs NBFIs 0.9% 1.0% Thrift Banks Thrift Banks 2.7% 3.1%
P707.0 Billion P812.8 Billion December 2003 December 2004
The trust industry remained liquid as shown by improved liquidity ratios. The bulk of trust assets were invested in government securities at 52.1 percent or P423.7 billion, the rest were invested in private instruments and shares of stocks (14.6 percent or P118.5 billion), cash and due from banks (12.9 percent or P105.1 billion) and in CTF/UITFs (4.6 percent or P37.2 billion). (Tables 43 and 44)
Trust and other fiduciary accounts (TOFA) comprised 49.6 percent or P403.3 billion of the total trust assets, while common trust funds (CTF)/unit investment trust funds (UITF) made up 36.6 percent or P297.4 billion and investment management accounts (IMA) held about 13.8 percent or P112.2 billion. A greater percentage of the trust accounts was peso- denominated at 73.9 percent; the remaining 26.1 percent was foreign-currency denominated. (Schedule 4a)
Source: Office of Supervisory Policy Development, Supervision and Examination Sector 99
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
TRUST DEPARTMENT INCOME
The trust business remains profitable and competitive as shown by the profitability indicators. Trust department income continued to be in the uptrend. For the one-year ended 31 December 2004, trust income was higher by 3.8 percent at P4.9 billion from last year’s P4.7 billion. Moreover, operating income reached P3.6 billion, up by 15.7 percent or P0.5 billion (from P3.1 billion). Its trend was also trekking uphill, rising by an average of 23.9 percent for the four-year period ended 31 December 2004. Likewise, the ratio of operating income to total trust assets gradually increased from 0.3 percent at end-December 2002 to 0.4 percent at end- December 2004.
In 2004, the trust industry was able to reduce its expenses by 19.2 percent to P1.3 from P1.6 billion, resulting in a lower cost-to-income ratio at 26.5 percent from 34.1 percent. Meanwhile, the ratio of trust department income to the average trust assets was maintained at 0.5 percent. Trust income was only 2.6 percent of the banking system’s total operating income (vs. 2.7 percent last year). (Tables 43 and 44)
MAJOR BALANCE SHEET TRENDS
ASSETS. While assets of the trust industry continued to grow, the pace slowed down at 15.0 percent and 18.5 percent in 2004 and 2003, respectively, compared to the 27.0 percent growth posted in 2002. Meantime, the banks’ trust assets expanded by 15.1 percent, higher by 3.3 percentage points than the 11.8 percent growth in domestic deposit liabilities (excluding trust deposits) of these banks. Comparatively, the ratio of banks’ trust assets to their domestic deposit liabilities (excluding trust deposits) continued to rise from a low of 23.8 percent at end-year 2001 to as high as 33.8 percent at end-year 2004.
Trust System: Asset Mix
Investments in Gov't Investments in Gov't Loans and Discounts Loans and Discounts Securities Securities 8.9% 7.8% Cash & due 48.4% Cash & due 52.1% from banks from banks 11.9% 12.9% Others 6.3% Others 4.8% ROPOA 0.1% ROPOA 0.1%
Investments in Real Investments in Real Estate 1.8% Estate 1.6% Investments in Private Investments in CTFs 4.2% Investments in Private Instruments & Stocks Investments in CTFs 4.6% Instruments & Stocks 19.9% 14.6%
P707.0 Billion P812.8 Billion December 2003 December 2004
Source: Office of Supervisory Policy Development, Supervision and Examination Sector 100
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
The asset portfolio consisted mainly of liquid and relatively less risky financial transactions, as reflected by the asset quality indicators. The trust industry placed 52.1 percent or P423.7 billion of their funds in government securities, investing less in private instruments and shares of stocks which declined to P118.5 billion or 14.6 percent (from P140.5 billion or 19.9 percent last year) of total trust assets (Tables 45)
Meanwhile, cash and due from banks, the third largest component (12.9 percent) of trust assets, rose by 25.1 percent to P105.1 billion from P84.0 billion. Likewise, other assets (6.3 percent) increased by 50.0 percent to P51.6 billion, including investments in CTFs/UITFs (4.6 percent), which were also up by 25.7 percent to P37.2 billion.
Decline in asset share were posted by loans, net (7.8 percent from 8.9 percent last year) and by investments in real estate (1.6 percent from 1.8 percent). Real and other properties acquired in settlement of loans, whereby net posted stayed at 0.1 percent of the total trust assets.
ACCOUNTABILITIES. The industry was funded mainly by major fiduciary services with respective shares reaching 49.6 percent (TOFA), 36.6 percent (CTF), and 13.8 percent (IMA) of the industry’s total accountabilities by end-December 2004. It may be noted that CTFs, which would soon be replaced by the UTIFs, continue to increase their share from only 24.7 percent at end-year 2001, while IMAs’ share kept on declining from 19.3 percent at end-year 2001.
The year-on-year increments of these accounts (i.e., TOFA – P51.4 billion, CTF – P47.6 billion and IMA – P6.8 billion) funded the 15.0 percent trust assets growth. Trust System: IMA, CTF and TOFA Distribution
In P Billion
900.0
800.0
700.0
600.0
500.0 IMA
400.0 CTF 300.0
200.0 TOFA
100.0
- 2001 2002 2003 2004
Source: Office of Supervisory Policy Development, Supervision and Examination Sector 101
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
Majority of TOFA and CTF accountabilities was peso-denominated, at 79.4 percent and 55.0 percent, respectively of the total accountabilities. TOFA accountabilities were comprised of: personal trust – 29.1 percent or P117.4 billion, employee benefit plans under trust – 20.9 percent or P84.3 billion, pre-need plans – 18.2 percent or P73.5 billion, administratorship – 6.8 percent or P27.5 billion, other institutional trust – 5.3 percent or P21.4 billion, escrow – 4.0 percent or P16.1 billion and all other TOFA – 15.7 percent or P63.1 billion. (Schedule 4a and Table 43)
Trust System: Funding Mix
Pre-need Others Pre-need Others Plans Institutional Others Trust & Plans Institutional Others Trust & 8.7% Trust Fiduciary 9.0% Trust Fiduciary Personal Personal 1.5% Accounts 2.6% Accounts Trust Trust 3.8% 6.6% 13.5% 14.4% Escrow 7.3% Escrow 2.0%
Emp. Benefit Emp. Benefit Plans 10.3% Plans 10.4%
Administratorship Administratorship 3.6% 3.4% Other Other CTFs/UITFs Accountabilities CTFs/UITFs Accountabilities IMA IMA 36.5% 1.6% 35.3% 1.4% 14.4% 13.7%
P707.0 Billion P812.8 Billion December 2003 December 2004
Except for the escrow accounts, which fell by 68.6 percent to P16.1 billion, all TOFA accountabilities increased. Other institutional trust posted the highest percentage increase of 105.0 percent (P21.4 billion from P10.4 billion). Personal trust followed with 22.6 percent increase (P117.4 billion from P95.7 billion). The rest of the TOFA accounts and their percentage increases were: pre-need plans at 19.4 percent (P73.5 billion from P61.6 billion), employee benefit plans under trust – 15.4 percent (P84.3 billion from P73.1 billion) and administratorship – 9.0 percent (P27.5 billion from P25.2 billion).
±±±±±
Source: Office of Supervisory Policy Development, Supervision and Examination Sector 102
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
LIST OF TABLES
THE PHILIPPINE BANKING INDUSTRY
TABLE 1 FINANCIAL HIGHLIGHTS TABLE 2 SELECTED PERFORMANCE INDICATORS TABLE 3 REGIONAL PROFILE TABLE 4 DENSITY RATIO TABLE 5 AUTOMATED TELLER MACHINES (ATMS) TABLE 6 PROFITABILITY INDICATORS TABLE 7 COMPOSITION OF OPERATING INCOME, BY BANK TYPE TABLE 8 ASSET QUALITY INDICATORS
UNIVERSAL AND COMMERCIAL BANKING INDUSTRY
TABLE 9 FINANCIAL HIGHLIGHTS TABLE 10 SELECTED PERFORMANCE INDICATORS TABLE 11 REGIONAL PROFILE TABLE 12 AUTOMATED TELLER MACHINES (ATMS) TABLE 13 BANKS AUTHORIZED TO ENGAGE IN E-BANKING OPERATIONS TABLE 14 PROFITABILITY INDICATORS TABLE 15 ASSET QUALITY INDICATORS
THRIFT BANKING INDUSTRY
TABLE 16 FINANCIAL HIGHLIGHTS TABLE 17 SELECTED PERFORMANCE INDICATORS TABLE 18 REGIONAL PROFILE TABLE 19 AUTOMATED TELLER MACHINES (ATMS) TABLE 20 BANKS AUTHORIZED TO ENGAGE IN E-BANKING OPERATIONS TABLE 21 PROFITABILITY INDICATORS TABLE 22 ASSET QUALITY INDICATORS
RURAL BANKING SYSTEM
TABLE 23 FINANCIAL HIGHLIGHTS TABLE 24 SELECTED PERFORMANCE INDICATORS TABLE 25 REGIONAL PROFILE TABLE 26 PROFITABILITY INDICATORS TABLE 27 PROFITABILITY INDICATORS, BY REGION TABLE 28 ASSET QUALITY INDICATORS
Source: Office of Supervisory Policy Development, Supervision and Examination Sector
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
COOPERATIVE BANKING SYSTEM
TABLE 29 FINANCIAL HIGHLIGHTS TABLE 30 SELECTED PERFORMANCE INDICATORS TABLE 31 REGIONAL PROFILE TABLE 32 PROFITABILITY INDICATORS TABLE 33 PROFITABILITY INDICATORS, BY REGION TABLE 34 ASSET QUALITY INDICATORS
NON-BANKS WITH QUASI-BANKING FUNCTIONS (NBQBS)
TABLE 35 FINANCIAL HIGHLIGHTS TABLE 36 SELECTED PERFORMANCE INDICATORS TABLE 37 PROFITABILITY INDICATORS TABLE 38 ASSET QUALITY INDICATORS
NON-STOCKS SAVINGS AND LOAN ASSOCIATIONS (NSSLAS)
TABLE 39 SELECTED PERFORMANCE INDICATORS TABLE 40 ASSET QUALITY INDICATORS
OFFSHORE BANKING UNITS (OBUS)
TABLE 41 FINANCIAL HIGHLIGHTS TABLE 42 SELECTED PERFORMANCE INDICATORS
TRUST OPERATIONS
TABLE 43 FINANCIAL HIGHLIGHTS TABLE 44 SELECTED PERFORMANCE INDICATORS TABLE 45 BALANCE SHEET STRUCTURE
Source: Office of Supervisory Policy Development, Supervision and Examination Sector
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
Table 1. Philippine Banking System: Financial Highlights
Levels (P Billion) 2000 2001 2002 2003r/ 2004 p/ Income Statement Total Operating Income 133.2 142.2 164.2 174.2 189.3 Net Interest Income 90.0 91.6 96.7 102.9 128.1 Non-interest Income 43.2 50.7 67.4 71.3 61.1 Operating Expenses 128.3 137.8 142.8 143.7 151.8 Bad Debts/Provisions for Probable Losses 19.3 23.0 25.6 23.7 19.7 Other Operating Expenses 108.9 114.8 117.3 120.1 132.1 Net Operating Income 4.9 4.5 21.3 30.4 37.4 Extraordinary Credits/(Charges) 8.6 11.4 6.1 19.1 8.0 Net Income Before Tax (NIBT) 13.6 15.9 27.4 49.6 45.4 Provisions for income tax 2.1 1.7 1.3 9.7 10.3 Net Income After Tax (NIAT) 11.5 14.2 26.2 39.9 35.1 Balance Sheet 1/ Total Assets 3,234.5 3,259.3 3,475.7 3,661.1 4,023.3 Cash and Due from Banks 359.0 299.8 332.0 285.1 320.0 Interbank Loans Receivable (IBL) 182.6 206.1 216.7 280.0 260.9 Loans, gross (exclusive of IBL) 1,622.2 1,606.1 1,641.1 1,702.3 1,769.8 Allowance for Probable Losses 117.4 138.6 152.4 160.8 160.9 Loans, net (exclusive of IBL) 1,504.3 1,466.8 1,488.1 1,540.9 1,608.9 Investment, net 656.6 759.7 880.0 990.5 1,249.0 ROPOA, net 153.8 183.0 206.3 223.5 235.8 Other Assets 378.2 343.9 352.7 341.2 348.7 Total Liabilities 2,795.9 2,815.2 3,011.3 3,181.8 3,517.4 Deposits 2,085.2 2,199.5 2,353.5 2,469.2 2,766.4 Bills Payable 415.0 343.5 357.3 381.0 386.5 Special Financing 2.5 2.1 1.6 1.0 0.6 Other Liabilities 293.2 270.1 299.0 295.4 312.4 Unsecured Subordinated Debt - - - 35.1 51.4 Total Capital Accounts 2/ 438.5 444.1 464.5 479.4 505.9
1/ Adjusted to net off the account "Due from Head Office" with "Due to Head Office" of branches of foreign banks 2/ Inclusive of the portion of the "Net Due To Head Office" which qualified as capital r/ Revised p/ Preliminary data
Source: Supervisory Data Center, Supervision and Examination Sector
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
Table 2. Philippine Banking System: Selected Performance Indicators
Growth Rates 2000 2001 2002 2003r/ 2004 p/ Income Statement Total Operating Income (8.6 %) 6.8 % 15.4 % 6.1 % 8.7 % Net Interest Income (7.6 %) 1.7 % 5.6 % 6.4 % 24.5 % Non-interest Income (10.6 %) 17.3 % 33.1 % 5.7 % (14.3 %) Operating Expenses (10.4 %) 7.4 % 3.7 % 0.6 % 5.6 % Bad Debts/Provisions for Probable Losses (48.9 %) 18.9 % 11.2 % (7.5 %) (16.6 %) Other Operating Expenses 3.5 % 5.3 % 2.2 % 2.4 % 10.0 % Net Operating Income 86.6 % (9.1 %) 374.6 % 42.7 % 23.0 % Extraordinary Credits/(Charges) (25.6 %) 31.9 % (46.1 %) 212.3 % (58.4 %) Net Income Before Tax (NIBT) (4.8 %) 16.9 % 73.1 % 80.5 % (8.4 %) Provisions for income tax (13.6 %) (19.7 %) (24.7 %) 667.6 % 6.9 % Net Income After Tax (NIAT) (3.0 %) 23.6 % 84.7 % 52.3 % (12.1 %) Balance Sheet Total Assets 1/ 9.5 % 0.8 % 6.6 % 5.3 % 9.9 % Cash and Due from Banks 6.1 % (16.5 %) 10.8 % (14.1 %) 12.2 % Interbank Loans Receivable (IBL) (21.6 %) 12.9 % 5.1 % 29.2 % (6.8 %) Loans, gross (exclusive of IBL) 6.8 % (1.0 %) 2.2 % 3.7 % 4.0 % Allowance for Probable Losses 17.0 % 18.0 % 10.0 % 5.5 % 0.0 % Loans, net (exclusive of IBL) 6.0 % (2.5 %) 1.4 % 3.5 % 4.4 % Investment, net 27.9 % 15.7 % 15.8 % 12.6 % 26.1 % ROPOA, net 28.0 % 19.0 % 12.7 % 8.4 % 5.5 % Other Assets 14.2 % (9.1 %) 2.6 % (3.3 %) 2.2 % Total Liabilities 10.7 % 0.7 % 7.0 % 5.7 % 10.5 % Deposits 8.6 % 5.5 % 7.0 % 4.9 % 12.0 % Bills Payable 19.2 % (17.2 %) 4.0 % 6.7 % 1.4 % Special Financing (54.0 %) (15.3 %) (23.9 %) (38.8 %) (34.9 %) Other Liabilities 16.2 % (7.9 %) 10.7 % (1.2 %) 5.7 % Unsecured Subordinated Debt 0.0 % 0.0 % 0.0 % 0.0 % 46.2 % Total Capital Accounts 2/ 2.1 % 1.3 % 4.6 % 3.2 % 5.5 % Selected Ratios Profitability Cost-to-Income Ratio 81.8 % 80.7 % 71.4 % 68.9 % 69.8 % Return on Assets (ROA) 0.4 % 0.4 % 0.8 % 1.1 % 0.9 % Return on Equity (ROE) 2.6 % 3.2 % 5.8 % 8.5 % 7.1 % Liquidity Cash and Due from Banks to Deposits 17.2 % 13.6 % 14.1 % 11.5 % 11.6 % Liquid Asset to Deposits Ratio3/ 44.7 % 44.3 % 47.6 % 47.9 % 53.2 % Loans (gross) to Deposits 86.6 % 82.4 % 78.9 % 80.3 % 73.4 % Asset quality Non-performing Loans (NPL) Ratio 14.9 % 16.9 % 14.6 % 13.8 % 12.5 % Non-performing Loans (NPL) Ratio (exclusive of IBL) 16.6 % 19.0 % 16.6 % 16.1 % 14.4 % NPL Coverage Ratio 43.7 % 45.3 % 50.2 % 51.5 % 58.0 % Non-performing Assets (NPA) to Gross Assets 12.7 % 14.6 % 13.4 % 13.2 % 11.8 % NPA Coverage Ratio 28.6 % 29.6 % 30.1 % 30.9 % 33.2 % Distressed Asset Ratio 25.1 % 28.4 % 27.7 % 27.0 % 25.3 % Capital Adequary Total Capital Accounts to Total Assets 13.6 % 13.6 % 13.4 % 13.1 % 12.6 % Capital Adequacy Ratio (solo basis)4/ 14.5 % 15.5 % 16.0 % 17.0 %a/
1/ Adjusted to net off the account "Due from Head Office" with "Due to Head Office" of branches of foreign banks 2/ Inclusive of the portion of the "Net Due To Head Office" which qualified as capital 3/ Liquid Assets refers to Cash and Due from Banks plus Investment, net (less equity investments, net) 4/ Based on the new framework provided for under Circular No. 280 dated 29 March 2001, formally adopted 1 July 2001; Under Circular No. 360 dated 3 December 2002, adopted 1 July 2003, Universal/Commercial Banks are to incorporate market risks in addition to credit risks r/ Revised p/ Preliminary data a/ Data as of end-June 2004
Source: Supervisory Data Center, Supervision and Examination Sector
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
Table 3. Philippine Banking Offices: Regional Profile
End-December 2004 End- December Branches/ Total Head Offices 2003 Other Offices
TOTAL 7,494 7,612 893 6,719
Nationwide 7,444 7,564 893 6,671
National Capital Region (NCR) 2,601 2,642 104 2,538
Luzon 2,966 3,014 485 2,529 Region I - Ilocos 373 380 69 311 Region II - Cagayan 205 214 36 178 Region III - Central Luzon 801 815 119 696 Region IV-A - CALABARZON 1,149 1,156 160 996 Region IV-B - MIMAROPA 117 118 28 90 Region V - Bicol 216 221 52 169 Cordillera Autonomous Region (CAR) 105 110 21 89
Visayas 1,000 1,012 172 840 Region VI - Western Visayas 389 390 80 310 Region VII - Central Visayas 488 494 65 429 Region VIII - Eastern Visayas 123 128 27 101
Mindanao 877 896 132 764 Region IX - Western Mindanao 109 112 17 95 Region X - Northern Mindanao 243 245 49 196 Region XI - Southern Mindanao 234 238 22 216 Region XII - Central Mindanao 165 168 21 147 Autonomous Region of Muslim Mindanao (ARMM) 26 26 4 22 CARAGA 100 107 19 88
Overseas 50 48 0 48
Asia-Pacific 27 24 0 24 Europe 13 14 0 14 North America 770 7 Africa 330 3
Source: Supervisory Data Center, Supervision and Examination Sector
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
Table 4. Philippine Banking System: Density Ratio
End-December 2003 End-December 2004
Banking 1/ Banking 1/ Offices per No. of persons Offices per No. of persons City/ served by each City/ served by each Municipality Banking Office Municipality Banking Office
Nationwide 5 10,892 5 10,929
National Capital Region (NCR) 153 4,190 155 4,190
Luzon 7 8,105 7 8,130
Region I - Ilocos 3 11,671 3 11,638 Region II - Cagayan 2 14,527 2 14,172 Region III - Central Luzon 6 10,417 6 10,428 Region IV-A - CALABARZON 8 8,364 8 8,522 Region IV-B - MIMAROPA 2 20,842 2 21,185 Region V - Bicol 2 23,141 2 22,986 Cordillera Autonomous Region (CAR) 1 14,266 1 13,904
Visayas 2 16,509 2 16,608
Region VI - Western Visayas 3 17,135 3 17,380 Region VII - Central Visayas 4 12,015 4 12,085 Region VIII - Eastern Visayas 1 32,362 1 31,709
Mindanao 2 22,181 2 22,178
Region IX - Western Mindanao 2 30,985 2 30,822 Region X - Northern Mindanao 3 12,154 3 12,299 Region XI - Southern Mindanao 5 24,095 5 24,252 Region XII - Central Mindanao 3 17,261 3 17,324 Autonomous Region of Muslim Mindanao (ARMM) . . 88,248 . . 89,631 CARAGA 1 23,410 1 22,368
1/ Philippine population based on National Statistics Office (NSO) data . . Banking offices per city/municipality was 0.27
Source: Supervisory Data Center, Supervision and Examination Sector
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
Table 5. Philippine Banking System: Automated Teller Machines (ATMs) As of end-periods indicated
On-site Off-site Total
20032004 2003 2004 2003 2004
NATIONWIDE 3,326 3,996 1,247 1,473 4,573 5,469
National Capital Region (NCR) 1,729 1,912 762 856 2,491 2,768
Luzon 868 1,138 283 368 1,151 1,506
Region I - Ilocos 83 119 12 13 95 132 Region II - Cagayan 27 53 2 3 29 56 Region III - Central Luzon 215 279 70 93 285 372 Region IV-A - CALABARZON 420 518 179 230 599 748 Region IV-B - MIMAROPA 15 24 3 5 18 29 Region V - Bicol 60 86 5 7 65 93 Cordillera Autonomous Region (CAR) 48 59 12 17 60 76
Visayas 412 524 138 171 550 695
Region VI - Western Visayas 157 203 41 51 198 254 Region VII - Central Visayas 215 262 96 118 311 380 Region VIII - Eastern Visayas 40 59 1 2 41 61
Mindanao 317 422 64 78 381 500
Region IX - Western Mindanao 48 66 5 10 53 76 Region X - Northern Mindanao 77 104 23 25 100 129 Region XI - Southern Mindanao 100 123 29 32 129 155 Region XII - Central Mindanao 62 83 5 9 67 92 Autonomous Region of Muslim Mindanao (ARMM) 412 00412 CARAGA 26 34 2 2 28 36
Source: Supervisory Data Center, Supervision and Examination Sector
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
Table 6. Philippine Banking System: Profitability Indicators
Major Accounts 2000 2001 2002 2003r/p 2004 /
Levels (P Billion) Total Operating Income 133.2 142.2 164.2 174.2 189.3 Net Interest Income 90.0 91.6 96.7 102.9 128.1 Interest Income 235.1 248.4 198.4 204.6 242.8 Interest Expenses 145.1 156.9 101.6 101.7 114.7 Non-interest Income 43.2 50.7 67.4 71.3 61.1 Fee-based income 18.9 20.8 21.9 24.3 27.3 Trading Income 12.7 18.7 33.8 32.9 15.7 Trust department income 2.52.63.44.44.7 Other income 9.28.68.49.713.4 Operating Expenses 128.3 137.8 142.8 143.7 151.8 Bad Debts/Provisions for Probable Losses 19.3 23.0 25.6 23.7 19.7 Other Operating Expenses 108.9 114.8 117.3 120.1 132.1 Net Operating Income 4.9 4.5 21.3 30.4 37.4 Extraordinary Credits/(Charges) 8.6 11.4 6.1 19.1 8.0 Net Income Before Tax (NIBT) 13.6 15.9 27.4 49.6 45.4 Provisions for income tax 2.11.71.39.710.3 Net Income After Tax (NIAT) 11.5 14.2 26.2 39.9 35.1 Growth Rates Total Operating Income (8.6 %) 6.8 % 15.4 % 6.1 % 8.7 % Net Interest Income (7.6 %) 1.7% 5.6% 6.4% 24.5% Interest Income (0.3 %) 5.7 % (20.2 %) 3.2 % 18.7 % Interest Expenses 4.8 % 8.1 % (35.2 %) 0.1 % 12.7 % Non-interest Income (10.6 %) 17.3 % 33.1 % 5.7 % (14.3 %) Fee-based income 5.2 % 10.2 % 5.1 % 11.2 % 12.5 % Trading Income (36.7 %) 48.0 % 80.3 % (2.5 %) (52.4 %) Trust department income (4.3 %) 4.1 % 29.6 % 30.7 % 6.4 % Other income 18.0 % (6.7 %) (1.2 %) 14.3 % 39.1 % Operating Expenses (10.4 %) 7.4 % 3.7 % 0.6 % 5.6 % Bad Debts/Provisions for Probable Losses (48.9 %) 18.9 % 11.2 % (7.5 %) (16.6 %) Other Operating Expenses 3.5% 5.3% 2.2% 2.4% 10.0% Net Operating Income 86.6 % (9.1 %) 374.6 % 42.7 % 23.0 % Extraordinary Credits/(Charges) (25.6 %) 31.9 % (46.1 %) 212.3 % (58.4 %) Net Income Before Tax (NIBT) (4.8 %) 16.9 % 73.1 % 80.5 % (8.4 %) Provisions for income tax (13.6 %) (19.7 %) (24.7 %) 667.6 % 6.9 % Net Income After Tax (NIAT) (3.0 %) 23.6 % 84.7 % 52.3 % (12.1 %) Selected Ratios 1/ Earning Asset Yield 10.3 % 10.2 % 7.7 % 7.4 % 8.0 % Funding Cost 2/ 6.1% 6.2% 3.9% 3.6% 3.8% Interest Spread 3/ 4.2% 4.0% 3.8% 3.8% 4.2% Net Interest Margin4/ 3.9% 3.8% 3.8% 3.7% 4.2% Non-interest Income to Total Operating Income 32.4 % 35.6 % 41.1 % 40.9 % 32.3 % Cost-to-Income Ratio5/ 81.8 % 80.7 % 71.4 % 68.9 % 69.8 % Return on Assets (ROA) 0.4% 0.4% 0.8% 1.1% 0.9% Return on Equity (ROE) 2.6% 3.2% 5.8% 8.5% 7.1% 1/ Earning Asset Yield refers to the ratio of interest income to average earning assets 2/ Funding Cost refers to the ratio of interest expenses to average interest-bearing liabilities 3/ Interest Spread refers to the difference between earning asset yield and funding cost 4/ Net Interest Margin refers to the ratio of net interest income to average earning assets 5/ Cost-to-Income Ratio refers to operating expenses, exclusive of bad debts and provisions to total operating income r/ Revised p/ Preliminary Data
Source: Supervisory Data Center, Supervision and Examination Sector
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
Table 7. Philippine Banking System: Composition of Operating Income, By Banking Type
2000 2001 2002 2003 2004
TOTAL OPERATING INCOME 100.0% 100.0% 100.0% 100.0% 100.0%
NET INTEREST INCOME All Banks 67.6% 64.4% 58.9% 59.1%r/p 67.7% / r/ Domestic Banks 68.4% 65.4% 58.7% 58.8% 66.1% p/
Private Domestic UBs 63.2% 57.9% 49.1% 50.0% 60.1% Private Domestic KBs 66.3% 67.0% 59.4% 60.8% 71.0% Government Banks 89.8% 81.3% 78.8% 78.4% 78.9% r/ Thrift Banks 70.8% 73.9% 75.2% 73.7% 76.6% Rural Banks 64.7% 65.1% 66.5% 69.6%r/ 70.5% p/ r/ p/ Cooperative Banks 43.0% 51.5% 51.7% 53.0% 51.4%
Foreign Bank Branches/Subsidiaries 63.8% 60.1% 59.8% 60.4% 76.3% Foreign Bank Branches 61.8% 58.3% 59.4% 59.6% 76.2% Foreign Bank Subsidiaries 78.1% 75.1% 63.9% 66.8% 76.6%
NON-INTEREST INCOME All Banks 32.4% 35.6% 41.1% 40.9%r/ 32.3% p/ r/ Domestic Banks 31.6% 34.6% 41.3% 41.2% 33.9% p/
Private Domestic UBs 36.8% 42.1% 50.9% 50.0% 39.9% Private Domestic KBs 33.7% 33.0% 40.6% 39.2% 29.0% Government Banks 10.2% 18.7% 21.2% 21.6% 21.1% r/ Thrift Banks 29.2% 26.1% 24.8% 26.3% 23.4% Rural Banks 35.3% 34.9% 33.5% 30.4%r/ 29.5% p/ r/ Cooperative Banks 57.0% 48.5% 48.3% 47.0% 48.6% p/
Foreign Bank Branches/Subsidiaries 36.2% 39.9% 40.2% 39.6% 23.7%
Foreign Bank Branches 38.2% 41.7% 40.6% 40.4% 23.8% Foreign Bank Subsidiaries 21.9% 24.9% 36.1% 33.2% 23.4%
p/ Preliminary Data r/ Revised
Source: Supervisory Data Center, Supervision and Examination Sector
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
Table 8. Philippine Banking System: Asset Quality Indicators 1/
Major Accounts 2000 2001 2002 2003r/ 2004p/ Levels (P Billion) Total Assets 3,234.5 3,259.3 3,475.7 3,661.1 4,023.3 Gross Assets2/ 3,356.5 3,406.3 3,622.5 3,816.3 4,187.9 Total Loan Portfolio (TLP) 1,804.8 1,812.2 1,840.8 1,961.4 2,016.6 Interbank Loans Receivable (IBL) 182.6 206.1 216.7 280.0 260.9 Total Loan Portfolio (TLP), (exclusive of IBL) 1,622.2 1,606.1 1,624.1 1,681.4 1,755.7 Total Loan Portfolio (TLP), net (exclusive of IBL) 1,504.3 1,466.9 1,488.1 1,540.9 1,608.9 Non-performing Loans (NPL) 268.7 305.8 269.6 271.4 252.9 Loan Loss Reserves (LLR) 117.4 138.6 135.4 139.9 146.7 ROPOA, gross3/ 158.5 191.4 217.6 238.8 253.7 Allowance for ROPOA 4.7 8.4 11.3 15.3 17.8 Restructured Loans (RL), gross 103.7 117.9 132.4 139.0 128.5 4/ Restructured Loans (RL), performing 65.8 72.7 83.7 83.5 68.5 5/ Distressed Assets 492.9 569.9 570.9 593.7 575.1 Non-performing Assets (NPAs)6/ 427.1 497.2 487.2 502.1 495.6 Allowance for Probable Losses on NPAs 122.1 147.0 146.8 155.2 164.6 Growth Rates Total Assets 9.5 % 0.8 % 6.6 % 5.3 % 9.9 % Gross Assets2/ 9.8 % 1.5 % 6.3 % 5.4 % 9.7 % TLP 3.0 % 0.4 % 1.6 % 6.5 % 2.8 % IBL (21.6 %) 12.9 % 5.1 % 29.2 % (6.8 %) TLP (exclusive of IBL) 6.8 % (1.0 %) 1.1 % 3.5 % 4.4 % TLP, net (exclusive of IBL) 6.0 % (2.5 %) 1.4 % 3.5 % 4.4 % NPL 21.0 % 13.8 % (11.8 %) 0.7 % (6.8 %) LLR 17.0 % 18.0 % (2.3 %) 3.3 % 4.9 % ROPOA, gross3/ 29.4 % 20.8 % 13.7 % 9.7 % 6.2 % Allowance for ROPOA 99.6 % 80.4 % 34.6 % 34.8 % 16.7 % RL, gross 35.0 % 13.7 % 12.4 % 4.9 % (7.5 %) RL, performing 4/ 17.3 % 10.5 % 15.1 % (0.2 %) (18.0 %) 5/ Distressed Assets 23.1 % 15.6 % 0.2 % 4.0 % (3.1 %) NPAs6/ 24.0 % 16.4 % (2.0 %) 3.1 % (1.3 %) Allowance for Probable Losses on NPAs 18.9 % 20.4 % (0.2 %) 5.7 % 6.1 % Selected Ratios RL to TLP 5.7 % 6.5 % 7.1 % 7.0 % 6.3 % LLR to TLP 6.5 % 7.6 % 7.4 % 7.1 % 7.3 % NPL Ratio (inclusive of IBL) 14.9 % 16.9 % 14.6 % 13.8 % 12.5 % NPL Ratio (exclusive of IBL) 16.6 % 19.0 % 16.6 % 16.1 % 14.4 % NPL Coverage 7/ 43.7 % 45.3 % 50.2 % 51.5 % 58.0 % NPA to Gross Assets 12.7 % 14.6 % 13.4 % 13.2 % 11.8 % NPA Coverage8/ 28.6 % 29.6 % 30.1 % 30.9 % 33.2 % Distressed Assets Ratio9/ 25.1 % 28.4 % 27.7 % 27.0 % 25.3 % 1/ Asset Quality Indicators defined per BSP Circular No. 202 dated 27 May 1999 amended by BSP Circular No. 351 dated 19 September 2002 2/ Gross Assets refers to Total Assets, net of reserves plus Loan Loss Reserves (LLR) plus provision for ROPOA 3/ ROPOA refers to Real and Other Properties Owned or Acquired 4/ Data as of end-2000 to end-2003 are based on current RLs. Figures for end-2004 and subsequent years are based on performing RLs. 5/ Distressed Assets refers to NPLs plus ROPOA, gross and Current RLs from end-2000 to end-2003. Performing RLs replaced current RLs from end- 2004 and subsequent years. 6/ NPA refers to NPLs plus ROPOA, gross 7/ NPL Coverage refers to the ratio of LLR to NPL 8/ NPA Coverage refers to the ratio of LLR (for Loans and ROPOA) to NPAs 9/ Distressed Assets Ratio refers to the ratio of Distressed Assets to TLP plus ROPOA r/ Revised p/ Preliminary data
Source: Supervisory Data Center, Supervision and Examination Sector
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
Table 9. Universal and Commercial Banking System: Financial Highlights
Levels (P Billion) 2000 2001 2002 2003 2004 Income Statement Total Operating Income 114.9 123.1 142.0 151.2 163.8 Net Interest Income 77.4 78.0 80.8 86.4 109.4 Non-interest Income 37.5 45.1 61.2 64.8 54.4 Operating Expenses 108.3 117.2 122.1 121.4 127.2 Bad Debts/Provisions for Probable Losses 17.6 22.0 24.1 21.9 17.9 Other Operating Expenses 90.7 95.1 98.0 99.6 109.2 Net Operating Income 6.6 6.0 20.0 29.8 36.6 Extraordinary Credits/(Charges) 6.6 8.4 5.3 18.0 6.1 Net Income Before Tax 13.2 14.4 25.3 47.7 42.7 Provisions for Income Tax 1.7 1.1 0.8 9.1 9.5 Net Income After Tax (NIAT) 11.6 13.3 24.4 38.7 33.3 Balance Sheet 1/ Total Assets 2,936.0 2,942.8 3,141.4 3,297.2 3,617.6 Cash and Due from Banks 321.6 265.7 295.9 243.6 274.5 Interbank Loans Receivable (IBL) 176.4 201.2 209.1 274.0 254.8 Loans, gross (exclusive of IBL) 1,451.8 1,423.8 1,446.1 1,492.8 1,541.7 Allowance for Probable Losses 107.2 127.4 141.2 149.7 149.4 Loans, net (exclusive of IBL) 1,344.1 1,295.8 1,304.3 1,342.5 1,392.3 Investments, net 624.4 723.0 840.4 942.9 1,188.1 ROPOA, net 128.2 151.1 172.9 188.3 194.9 Other Assets 341.3 305.9 319.0 305.8 313.0 Total Liabilities 2,553.6 2,553.9 2,732.6 2,873.4 3,167.1 Deposits 1,903.5 1,992.0 2,125.9 2,209.8 2,472.3 Bills Payable 376.8 310.4 326.4 350.8 352.2 Special Financing 1.9 1.6 1.1 0.5 0.2 Other Liabilities 271.5 249.9 279.3 277.1 291.0 Unsecured Subordinated Debt - - - 35.1 51.4 Total Capital Accounts 2/ 382.4 388.8 408.8 423.8 450.5 1/ Adjusted to net off the account "Due from Head Office" with "Due to Head Office" of branches of foreign banks 2/ Inclusive of the portion of the "Net Due to Head Office" which qualified as capital
Source: Supervisory Data Center, Supervision and Examination Sector
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
Table 10. Universal and Commercial Banking System: Selected Performance Indicators
Growth Rates 2000 2001 2002 2003 2004 Income Statement Total Operating Income (9.7 %) 7.1 % 15.4 % 6.5 % 8.3 % Net Interest Income (8.8 %) 0.7 % 3.6 % 6.9 % 26.6 % Non-interest Income (11.5 %) 20.4 % 35.7 % 5.9 % (16.0 %) Operating Expenses (12.3 %) 8.2 % 4.2 % (0.5 %) 4.7 % Bad Debts/Provisions for Probable Losses (50.9 %) 25.4 % 9.1 % (9.0 %) (18.0 %) Other Operating Expenses 3.5 % 4.8 % 3.1 % 1.6 % 9.7 % Net Operating Income 76.2 % (9.9 %) 235.5 % 49.3 % 23.0 % Extraordinary Credits (19.8 %) 26.9 % (36.9 %) 237.4 % (65.9 %) Net Income Before Tax 10.1 % 8.6 % 75.7 % 88.9 % (10.4 %) Provisions for Income Tax 2.4 % (32.4 %) (25.3 %) 972.3 % 4.5 % Net Income After Tax (NIAT) 11.3 % 14.5 % 84.4 % 58.3 % (13.9 %) Balance Sheet Total Assets 1/ 9.6 % 0.2 % 6.8 % 5.0 % 9.7 % Cash and Due from Banks 3.2 % (17.4 %) 11.3 % (17.7 %) 12.7 % Interbank Loans Receivable (IBL) (21.5 %) 14.1 % 3.9 % 31.1 % (7.0 %) Loans, gross (exclusive of IBL) 6.9 % (1.9 %) 1.6 % 3.2 % 3.3 % Allowance for Probable Losses 18.4 % 18.8 % 10.8 % 6.0 % (0.2 %) Loans, net (exclusive of IBL) 6.1 % (3.6 %) 0.7 % 2.9 % 3.7 % Investments, net 29.7 % 15.8 % 16.2 % 12.2 % 26.0 % ROPOA, net 30.3 % 17.9 % 14.4 % 8.9 % 3.5 % Other Assets 15.1 % (10.4 %) 4.3 % (4.1 %) 2.3 % Total Liabilities 10.9 % 0.0 % 7.0 % 5.2 % 10.2 % Deposits 8.6 % 4.7 % 6.7 % 3.9 % 11.9 % Bills Payable 18.6 % (17.6 %) 5.1 % 7.5 % 0.4 % Special Financing (53.2 %) (14.8 %) (31.3 %) (51.9 %) (65.9 %) Other Liabilities 18.9 % (7.9 %) 11.7 % (0.8 %) 5.0 % Unsecured Subordinated Debt 0.0 % 0.0 % 0.0 % 0.0 % 46.2 % Total Capital Accounts 2/ 1.3 % 1.7 % 5.1 % 3.7 % 6.3 % Selected Ratios
Profitability Cost-to-Income 79.0 % 77.3 % 69.0 % 65.8 % 66.7 % Return on Assets (ROA) 0.4 % 0.5 % 0.8 % 1.2 % 1.0 % Return on Equity (ROE) 3.0 % 3.4 % 6.1 % 9.3 % 7.6 % Liquidity Cash and Due from Banks to Deposits 16.9 % 13.3 % 13.9 % 11.0 % 11.1 % Liquid Assets to Deposits 3/ 45.4 %r/r 45.5 %/r 49.2 %/ 49.5 % 55.2 % Loans, gross to Deposits 85.5 % 81.6 % 77.9 % 80.0 % 72.7 % Asset quality Non-performing Loans (NPL) 15.1 % 17.3 % 15.0 % 14.1 % 12.7 % Non-performing Loans (NPL, exclusive of IBL) 16.9 % 19.8 % 17.1 % 16.7 % 14.8 % NPL Coverage 43.6 % 45.2 % 51.2 % 53.0 % 60.4 % Non-performing Assets (NPA) to Gross Assets 12.4 % 14.3 % 13.1 % 12.9 % 11.4 % NPA Coverage 29.4 % 30.6 % 31.7 % 32.6 % 35.6 % Distressed Assets 25.0 % 28.6 % 27.9 % 27.1 % 25.2 % Capital Adequacy Total Capital Accounts to Total Assets 13.0 % 13.2 % 13.0 % 12.9 % 12.5 % Capital Adequacy Ratio (Solo) 4/ 15.6 % 14.1 % 15.0 % 15.7 %r/ 16.9 %a/ 1/ Adjusted to net off the account "Due from Head Office" with "Due to Head Office" of branches of foreign banks 2/ Inclusive of the portion of the "Net Due to Head Office" which qualified as capital 3/ Liquid Assets refers to Cash and Due from Banks plus Investments,net (less equity investments, net) 4/ Based on Circular No. 280 dated 29 March 2001, formally adopted 1 July 2001; Under Circular No. 360 dated 3 December 2002, adopted 1 July 2003, Universal/Commercial banks are to incorporate market risks in addition to credit risks r/ Revised a/ Data as of end-June 2004
Source: Supervisory Data Center, Supervision and Examination Sector
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
Table 11. Universal and Commercial Banking System: Regional Profile
2004 2003 Branches/ Total Head Offices Other Offices
TOTAL 4,296 4,329 42 4,287
Nationwide 4,246 4,281 42 4,239
National Capital Region (NCR) 2,027 2,041 41 2,000
Luzon 1,179 1,196 0 1,196
Region I - Ilocos 147 151 151 Region II - Cagayan 71 72 72 Region III - Central Luzon 332 332 332 Region IV-A - CALABARZON 439 447 447 Region IV-B - MIMAROPA 39 39 39 Region V - Bicol 97 98 98 Cordillera Autonomous Region (CAR) 54 57 57
Visayas 556 559 0 559
Region VI - Western Visayas 222 224 224 Region VII - Central Visayas 263 263 263 Region VIII - Eastern Visayas 71 72 72
Mindanao 484 485 1 484
Region IX - Western Mindanao 74 75 1 74 Region X - Northern Mindanao 118 119 119 Region XI - Southern Mindanao 138 136 136 Region XII - Central Mindanao 95 96 96 Autonomous Region of Muslim Mindanao (ARMM) 21 21 21 CARAGA 38 38 38
Overseas 50 48 0 48
Asia-Pacific 27 24 24 Europe 13 14 14 North America 77 7 Africa 33 3
Source: Supervisory Data Center, Supervision and Examination Sector
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
Table 12. Universal and Commercial Banking System: Automated Teller Machines (ATMs) As of Periods Indicated
On-Site Off-Site Total 2003 2004 2003 2004 2003 2004
NATIONWIDE 3,131 3,684 1,210 1,416 4,341 5,100
National Capital Region (NCR) 1,618 1,726 736 817 2,354 2,543
Luzon 813 1,058 279 359 1,092 1,417 Region I - Ilocos 77 111 12 13 89 124 Region II - Cagayan 27 52 2 3 29 55 Region III - Central Luzon 208 263 68 90 276 353 Region IV-A - CALABARZON 381 467 177 224 558 691 Region IV-B - MIMAROPA 15 24 3 5 18 29 Region V - Bicol 59 84 5 7 64 91 Cordillera Autonomous Region (CAR) 46 57 12 17 58 74
Visayas 394 496 133 163 527 659 Region VI - Western Visayas 150 195 40 48 190 243 Region VII - Central Visayas 205 243 92 113 297 356 Region VIII - Eastern Visayas 39 58 1 2 40 60
Mindanao 306 404 62 77 368 481 Region IX - Western Mindanao 48 64 5 10 53 74 Region X - Northern Mindanao 75 99 22 25 97 124 Region XI - Southern Mindanao 94 116 28 31 122 147 Region XII - Central Mindanao 59 79 5 9 64 88 Autonomous Region of Muslim Mindanao 4 12 - - 4 12 CARAGA 26 34 2 2 28 36
Source: Supervisory Data Center, Supervision and Examination Sector
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
Table 13. Universal and Commercial Banks Authorized to Engage in E-Banking Operations As of End-December 2004
Mobile/ Internet Non- thru Bancnet's & Cash Name of Bank Mobile Internet Proprietary Mobile Megalink's Card Switch
Domestic Banks 1 Allied Banking Corporation 2Asia United Bank Corporation 3 Banco de Oro Universal Bank 4Bank of Commerce 5 Bank of the Philippines Islands 6 China Bank 7 Development Bank of the Philippines 1/ 8East West Banking Corporation 9Equitable PCI Bank 10 Export and Industry Bank 11 International Exchange Bank 12 Land Bank of the Philippines 13 Maybank 14 Metropolitan Bank and Trust Company 15 Philippine Bank of Communications 16 Philippine National Bank 17 Philippine Trust Company 18 Rizal Commercial Banking Corporation 19 Security Bank Corporation 20 Union Bank of the Philippines 21 United Coconut Planters Bank Subsidiary of a Foreign Bank 22 ABN AMRO Bank Branches of Foreign Banks 23 ANZ Banking Group, Ltd. 24 Bank of America, N.A. 25 Chinatrust Bank 26 Citibank, N.A. (Phils.) 27 Deutsche Bank AG 28 JP Morgan Chase Bank 29 Korea Exchange Bank 30 Mizuho Bank (formerly Fuji Bank, Ltd.) 31 Standard Chartered Bank 32 The Bank of Tokyo-Mitsubishi, Ltd. 33 The Hongkong & Shanghai Banking Corp. Ltd. 1/ Internet operation has efinancing for small and medium enterprises.
Source: Supervisory Data Center, Supervision and Examination Sector
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
Table 14. Universal and Commercial Banking System: Profitability Indicators
Major Accounts 2000 2001 2002 2003 2004
Levels (P Billion) Total Operating Income 114.9 123.1 142.0 151.2 163.8 Net Interest Income 77.4 78.0 80.8 86.4 109.4 Interest Income 206.1 216.6 168.7 173.9 207.3 Interest Expenses 128.6 138.6 87.9 87.6 97.9 Non-interest Income 37.5 45.1 61.2 64.8 54.4 Fee-based Income 15.6 17.2 18.1 20.2 22.7 Trading Income 12.2 18.4 32.7 32.0 15.3 Trust Department Income 2.4 2.5 3.3 4.3 4.6 Other Income 7.3 7.0 7.1 8.2 11.9 Operating Expenses 108.3 117.2 122.1 121.4 127.2 Bad Debts/Provisions for Probable Losses 17.6 22.0 24.0 21.9 17.9 Other Operating Expenses 90.7 95.1 98.0 99.6 109.2 Net Operating Income 6.6 5.9 19.9 29.8 36.6 Extraordinary Credits 6.6 8.4 5.3 18.0 6.1 Net Income Before Tax 13.2 14.4 25.3 47.7 42.7 Provisions for Income Tax 1.7 1.1 0.8 9.1 9.5 Net Income After Tax (NIAT) 11.6 13.2 24.4 38.7 33.3 Growth Rates Total Operating Income (9.7 %) 7.1 % 15.4 % 6.5 % 8.3 % Net Interest Income (8.8 %) 0.7 % 3.6 % 6.9 % 26.6 % Interest Income 0.5 % 5.1 % (22.1 %) 3.1 % 19.2 % Interest Expenses 7.1 % 7.8 % (36.6 %) (0.4 %) 11.9 % Non-interest Income (11.5 %) 20.4 % 35.7 % 5.9 % (16.0 %) Fee-based Income 5.4 % 10.6 % 5.2 % 11.6 % 12.3 % Trading Income (38.4 %) 50.7 % 78.1 % (2.1 %) (52.4 %) Trust Department Income (3.6 %) 3.9 % 29.2 % 30.9 % 7.0 % Other Income 38.9 % (4.0 %) 1.3 % 16.8 % 44.0 % Operating Expenses (12.3 %) 8.2 % 4.2 % (0.5 %) 4.7 % Bad Debts/Provisions for Probable Losses (50.9 %) 25.4 % 9.1 % (9.0 %) (18.0 %) Other Operating Expenses 3.5 % 4.8 % 3.1 % 1.6 % 9.7 % Net Operating Income 76.2 % (9.9 %) 235.5 % 49.3 % 23.0 % Extraordinary Credits (19.8 %) 26.9 % (36.9 %) 237.4 % (65.9 %) Net Income Before Tax 10.1 % 8.6 % 75.7 % 88.9 % (10.4 %) Provisions for Income Tax 2.4 % (32.4 %) (25.3 %) 972.3 % 4.5 % Net Income After Tax (NIAT) 11.3 % 14.5 % 84.4 % 58.3 % (13.9 %) Selected Ratios Earning Asset Yield 1/ 9.9 % 9.7 % 7.2 % 6.9 % 7.5 % Funding Cost 2/ 5.9 % 6.0 % 3.7 % 3.5 % 3.6 % Interest Spread 3/ 4.0 % 3.7 % 3.5 % 3.4 % 3.9 % Net Interest Margin4 / 3.7 % 3.5 % 3.5 % 3.4 % 4.0 % Non-interest Income to Total Operating Income 32.6 % 36.6 % 43.1 % 42.9 % 33.2 % Cost-to-Income 5/ 79.0 % 77.3 % 69.0 % 65.8 % 66.7 % 6/ Return on Assets (ROA) 0.4 % 0.5 % 0.8 % 1.2 % 1.0 % Return on Equity (ROE) 6/ 3.0 % 3.4 % 6.1 % 9.3 % 7.6 % 1/ Earning Asset Yield refers to the ratio of interest income to average earning assets 2/ Funding Cost refers to the ratio of interest expenses to average interest-bearing liabilities 3/ Interest Spread refers to the difference between earning asset yield and funding cost 4/ Net Interest Margin refers to the ratio of net interest income to average earning assets 5/ Cost-to-Income Ratio refers to the ratio of operating expenses (exclusive of bad debts and provisions) to total operating income 6/ ROA and ROE refers to the ratio of annualized NIAT to average assets and capital, respectively.
Source: Supervisory Data Center, Supervision and Examination Sector
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
Table 15. Universal and Commercial Banking System: Asset Quality Indicators 1/
Major Accounts 2000 2001 2002 2003 2004
Levels (P Billion) Total Assets 2,936.0 2,942.8 3,141.4 3,297.2 3,617.6 Gross Assets 2/ 3,046.9 3,077.6 3,277.0 3,441.2 3,770.6 Total Loan Portfolio (TLP) 1,628.2 1,625.1 1,639.4 1,747.2 1,784.2 Interbank Loans Receivable (IBL) 176.4 201.2 209.1 274.0 254.8 Total Loan Portfolio (TLP), (exclusive of IBL) 1,451.8 1,423.8 1,430.3 1,473.1 1,529.4 Total Loan Portfolio (TLP), net (exclusive of IBL) 1,344.1 1,295.8 1,304.2r/ 1,342.5r/ 1,392.3 Non-performing Loans (NPL) 245.8 281.9 245.1 245.5 227.0 Loan Loss Reserves (LLR) 107.2 127.4 125.5 130.0 137.1 ROPOA, gross 3/ 131.9 158.6 183.0 202.3 210.8 Allowance for ROPOA 3.7 7.4 10.1 14.0 15.9 Restructured Loans (RL), gross 99.2 113.0 128.0 134.3 123.5 Restructured Loans (RL), performing 4/ 62.2 69.3 80.6 79.8 64.9 Distressed Assets 5/ 439.9 509.8 508.7 527.7 502.8 Non-performing Assets (NPAs) 6/ 377.7 440.5 428.1 442.3 430.4 Allowance for Probable Losses on NPAs 110.9 134.9 135.6 144.0 153.0
Growth Rates Total Assets 9.6 % 0.2 % 6.8 % 5.0 % 9.7 % 2/ Gross Assets 9.9 % 1.0 % 6.5 % 5.0 % 9.6 % TLP 2.9 % (0.2 %) 0.9 %r/r 6.6 %/ 2.1 % IBL (21.5 %) 14.1 % 3.9 % 31.1 % (7.0 %) TLP (exclusive of IBL) 6.9 % (1.9 %) 0.5 % 3.0 % 3.8 % r/r/ TLP, net (exclusive of IBL) 6.1 % (3.6 %) 0.7 % 2.9 % 3.7 % NPL 25.8 % 14.7 % (13.1 %) 0.2 % (7.5 %) LLR 18.4 % 18.8 % (1.5 %) 3.6 % 5.5 % ROPOA, gross 3/ 32.0 % 20.2 % 15.4 % 10.5 % 4.2 % Allowance for ROPOA 130.9 % 102.2 % 36.1 % 38.0 % 13.7 % RL, gross 33.0 % 13.9 % 13.3 % 4.9 % (8.0 %) RL, performing4/ 14.2 % 11.3 % 16.4 % (0.9 %) (18.7 %) 5/ Distressed Assets 25.7 % 15.9 % (0.2 %) 3.7 % (4.7 %) 6/ NPAs 27.9 % 16.6 % (2.8 %) 3.3 % (2.7 %) Allowance for Probable Losses on NPAs 20.3 % 21.6 % 0.5 % 6.2 % 6.3 % Selected Ratios RL to TLP 6.1 % 7.0 % 7.7 % 7.6 % 6.9 % LLR to TLP 6.6 % 7.8 % 7.7 % 7.4 % 7.7 % NPL (inclusive of IBL) 15.1 % 17.3 % 15.0 % 14.1 % 12.7 % NPL (exclusive of IBL) 16.9 % 19.8 % 17.1 % 16.7 % 14.8 % NPL Coverage 7/ 43.6 % 45.2 % 51.2 % 53.0 % 60.4 % NPA to Gross Assets 12.4 % 14.3 % 13.1 % 12.9 % 11.4 % NPA Coverage 8/ 29.4 % 30.6 % 31.7 % 32.6 % 35.6 % Distressed Assets9/ 25.0 % 28.6 % 27.9 % 27.1 % 25.2 %
1/ Asset Quality Indicators defined per BSP Circular No. 202 dated 27 May 1999 amended by BSP Circular No. 351 dated 19 September 2002 2/ Gross Assets refers to Total Assets, net of reserves plus Loan Loss Reserves (LLR) plus provision for ROPOA 3/ ROPOA refers to Real and Other Properties Owned or Acquired 4/ Data as of end-2000 to end-2003 are based on current RLs. Figures for end-2004 and subsequent years are based on performing RLs. 5/ Distressed Assets refers to NPLs plus ROPOA, gross and Current RLs from end-2000 to end-2003. Performing RLs replaced current RLs from end-2004 and subsequent years. 6/ NPA refers to NPLs plus ROPOA, gross excluding performing sales contracts receivable per BSP Circular No. 380 dated 28 March 2003 7/ NPL Coverage refers to the ratio of LLR to NPL 8/ NPA Coverage refers to the ratio of valuation reserves (for Loans and ROPOA) to NPAs 9/ Distressed Assets Ratio refers to the ratio of Distressed Assets to TLP plus ROPOA, gross r/ Revised
Source: Supervisory Data Center, Supervision and Examination Sector
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
Table 16. Thrift Banking System: Financial Highlights
Levels (P Billion) 2000 2001 2002 2003 2004 Income Statement Total Operating Income 12.0 12.3 14.5 14.4 15.6 Net Interest Income 8.6 9.2 10.9 10.6 11.9 Non-interest Income 3.4 3.1 3.6 3.7 3.6 Operating Expenses 14.4 14.6 14.0 15.0 16.3 Bad Debts/Provisions for Probable Losses 1.6 0.8 1.3 1.6 1.4 Other Operating Expenses 12.8 13.8 12.6 13.5 14.9 Net Operating Income (Loss) (2.4) (2.3) 0.5 (0.7) (0.7) Extraordinary Credits/(Charges) 1.6 2.6 0.4 0.8 1.4 Net Income Before Tax (0.8) 0.2 0.9 0.1 0.6 Provisions for Income Taxes 0.2 0.4 0.2 0.3 0.6 Net Income After Tax (NIAT) (1.0) (0.1) 0.7 (0.2) . . . Balance Sheet Total Assets 233.2 245.2 253.4 274.3 305.4 Cash and Due from Banks 25.8 21.2 21.1 23.7 27.2 Interbank Loans Receivable (IBL) 6.2 4.9 7.6 5.9 6.1 Loans, gross (exclusive of IBL) 128.1 136.9 144.3 153.5 164.6 Allowance for Probable Losses 8.0 8.7 8.5 8.4 8.3 Loans, net (exclusive of IBL) 120.1 128.2 135.7 145.1 156.3 Investments, net 29.6 33.3 35.6 43.0 55.0 ROPOA, net 20.1 25.3 26.1 28.0 33.0 Other Assets 31.4 32.3 27.3 28.5 27.8 Total Liabilities 187.9 201.7 210.9 233.1 265.8 Deposits 140.3 160.5 172.8 197.2 223.7 Bills Payable 29.6 25.2 22.6 22.2 25.9 Special Financing 0.3 0.3 0.3 0.3 0.3 Other Liabilities 17.6 15.8 15.3 13.4 15.8 Total Capital Accounts 45.4 43.5 42.5 41.2 39.7 . . . Nil value due to rounding off: Net income after tax of P43.479 million.
Source: Supervisory Data Center, Supervision and Examination Sector
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
Table 17. Thrift Banking System: Selected Performance Indicators
Growth Rates 2000 2001 2002 2003 2004 Income Statement Total Operating Income (2.7 %) 1.8 % 17.8 % (0.7 %) 8.7 % Net Interest Income (2.5 %) 6.4 % 18.6 % (2.6 %) 12.7 % Non-interest Income (3.4 %) (9.7 %) 15.7 % 5.0 % (2.6 %) Operating Expenses 1.2 % 1.3 % (4.4 %) 7.5 % 8.9 % Bad Debts/Provisions for Probable Losses (9.6 %) (49.7 %) 64.4 % 16.0 % (7.4 %) Other Operating Expenses 2.8 % 7.7 % (8.4 %) 6.5 % 10.8 % Net Operating Income (Loss) (27.3 %) 1.6 % 120.8 % (234.4 %) (13.7 %) Extraordinary Credits/(Charges) (51.2 %) 60.1 % (85.2 %) 97.9 % 79.1 % Net Income Before Tax (152.9 %) 132.2 % 254.5 % (88.4 %) 503.2 % Provisions for Income Taxes (62.6 %) 52.2 % (41.4 %) 63.5 % 62.1 % Net Income After Tax (NIAT) (225.2 %) 88.1 % 648.0 % (137.9 %) 117.5 % Balance Sheet Total Assets 8.3 % 5.1 % 3.3 % 8.2 % 11.4 % Cash and Due from Banks 51.4 % (17.7 %) (0.7 %) 12.7 % 14.8 % Interbank Loans Receivable (IBL) (26.0 %) (22.0 %) 56.8 % (22.0 %) 2.2 % Loans, gross (exclusive of IBL) 7.0 % 6.9 % 5.4 % 6.4 % 7.2 % Allowance for Probable Losses 1.2 % 8.2 % (1.8 %) (2.0 %) (0.9 %) Loans, net (exclusive of IBL) 7.4 % 6.8 % 5.9 % 6.9 % 7.7 % Investments, net (3.6 %) 12.6 % 6.9 % 20.6 % 28.0 % ROPOA, net 12.3 % 25.8 % 2.9 % 7.4 % 17.9 % Other Assets 6.7 % 2.8 % (15.4 %) 4.5 % (2.6 %) Total Liabilities 8.5 % 7.4 % 4.6 % 10.5 % 14.0 % Deposits 6.4 % 14.3 % 7.7 % 14.1 % 13.5 % Bills Payable 37.9 % (15.1 %) (10.2 %) (1.5 %) 16.7 % Special Financing (68.3 %) (15.6 %) (2.2 %) (2.5 %) (0.4 %) Other Liabilities (6.5 %) (10.1 %) (3.3 %) (12.6 %) 18.5 % Total Capital Accounts 7.8 % (4.1 %) (2.3 %) (3.0 %) (3.8 %) Selected Ratios
Profitability Cost-to-Income 106.3 % 112.4 % 87.4 % 93.8 % 95.6 % Return on Assets (ROA) (0.5 %) (0.1 %) 0.3 % (0.1 %) 0.0 % Return on Equity (ROE) (2.3 %) (0.3 %) 1.5 % (0.6 %) 0.1 % Liquidity Cash and Due from Banks to Deposits 18.4 % 13.2 % 12.2 % 12.0 % 12.2 % Liquid Assets to Deposits 1/ 38.1 % 31.8 % 32.6 % 33.7 % 36.7 % Loans, gross to Deposits 95.7 % 88.3 % 87.9 % 80.9 % 76.3 % Asset quality Non-performing Loans (NPL) 11.3 % 12.0 % 11.6 % 12.1 % 11.0 % Non-performing Loans (NPL, exclusive of IBL) 11.9 % 12.4 % 12.2 % 12.6 % 11.4 % NPL Coverage 52.8 % 51.1 % 43.1 % 38.8 % 37.0 % Non-performing Assets (NPA) to Gross Assets 15.0 % 17.0 % 17.0 % 16.2 % 15.9 % NPA Coverage 24.5 % 22.1 % 19.2 % 18.7 % 17.2 % Distressed Assets 24.9 % 27.1 % 26.3 % 27.4 % 27.6 % Capital Adequacy Total Capital Accounts to Total Assets 19.4 % 17.7 % 16.8 % 15.0 % 13.0 % 2/ a/ Capital Adequacy Ratio (CAR) 23.9 % 19.2 % 20.6 % 18.9 % 17.9 % 1/ Liquid Assets refers to Cash and Due from Banks plus Investments,net (less equity investments, net) 2/ Based on Circular No. 280 dated 29 March 2001, formally adopted 1 July 2001 except end-December 2000 which were based on the Net Worth-to-Risk Assets ratio provided under Section 22 of R.A. No. 337 a/ Data as of end-June 2004
Source: Supervisory Data Center, Supervision and Examination Sector
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
Table 18. Thrift Banking Offices: Regional Profile
2004
2003 Head Branches/ Total Offices Other Offices
Nationwide 1,277 1,280 87 1,193
National Capital Region (NCR) 507 534 36 498
Luzon 536 524 37 487
Region I - Ilocos 37 36 1 35 Region II - Cagayan 8 8 2 6 Region III - Central Luzon 157 157 15 142 Region IV-A - CALABARZON 271 257 14 243 Region IV-B - MIMAROPA 22 23 1 22 Region V - Bicol 29 32 2 30 Cordillera Autonomous Region (CAR) 12 11 2 9
Visayas 151 147 11 136
Region VI - Western Visayas 43 36 3 33 Region VII - Central Visayas 101 104 8 96 Region VIII - Eastern Visayas 7 7 - 7
Mindanao 83 75 3 72
Region IX - Western Mindanao 7 6 6 Region X - Northern Mindanao 33 29 2 27 Region XI - Southern Mindanao 28 26 1 25 Region XII - Central Mindanao 9 8 8 Autonomous Region of Muslim Mindanao (ARMM) - - - CARAGA 6 6 6
Source: Supervisory Data Center, Supervision and Examination Sector
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
Table 19. Thrift Banking System: Automated Teller Machines (ATMs) As of periods indicated
On-site Off-site Total
2003 2004 2003 2004 2003 2004
Nationwide 195 312 37 57 232 369
National Capital Region (NCR) 111 186 26 39 137 225
Luzon 55 80 4 9 59 89 Region I - Ilocos 6 8 - 6 8 Region II - Cagayan - 1 - - 1 Region III - Central Luzon 7 16 2 3 9 19 Region IV-A - CALABARZON 39 51 2 6 41 57 Region IV-B - MIMAROPA - - - - Region V - Bicol 1 2 - - 1 2 Cordillera Autonomous Region (CAR) 2 2 - - 2 2
Visayas 18 28 5 8 23 36 Region VI - Western Visayas 7 8 1 3 8 11 Region VII - Central Visayas 10 19 4 5 14 24 Region VIII - Eastern Visayas 1 1 - - 1 1
Mindanao 11 18 2 1 13 19 Region IX - Western Mindanao - 2 - - - 2 Region X - Northern Mindanao 2 5 1 3 5 Region XI - Southern Mindanao 6 7 1 1 7 8 Region XII - Central Mindanao 3 4 - 3 4 Autonomous Region of Muslim Mindanao (ARMM) - - - - CARAGA - - -
Source: Supervisory Data Center, Supervision and Examination Sector
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
Table 20. Thrift Banks Authorized to Engage in E-Banking Operations As of 31 December 2004
Mobile/ Internet via Name of Bank Mobile Non-Mobile Internet Proprietary Bancnet or Megalink Switch
Financial Institution-Linked Thrift Banks
1. BPI Direct
2. BPI-Family Bank
3. HSBC Savings Bank
4. RCBC Savings Bank
Non-Linked Thrift Banks
6. Premiere Development Bank
7. Robinsons Savings Bank
8. The Manila Bank
9. Asiatrust Development Bank
10. Insular Savings Bank
11. Keppel Bank
Source: Supervisory Data Center, Supervision and Examination Sector
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
Table 21. Thrift Banking System: Profitability Indicators
Levels (P Billion) 2000 2001 2002 2003 2004 Total Operating Income 12.0 12.3 14.5 14.4 15.6 Net Interest Income 8.6 9.2 10.9 10.6 12.0 Interest Income 20.9 23.0 20.3 20.6 24.0 Interest Expenses 12.3 13.8 9.4 10.0 12.0 Non-interest Income 3.4 3.1 3.6 3.7 3.6 Fee-based Income 1.7 1.8 1.8 2.0 2.4 Trading Income 0.4 0.3 1.0 0.8 0.4 Trust Department Income 0.1 0.1 0.1 0.1 0.1 Other Income 1.2 0.9 0.7 0.8 0.8 Operating Expenses 14.4 14.6 14.0 15.0 16.3 Bad Debts/Provisions for Probable Losses 1.6 0.8 1.3 1.6 1.4 Other Operating Expenses 12.8 13.8 12.6 13.5 14.9 Net Operating Income (Loss) (2.4) (2.3) 0.5 (0.7) (0.7) Extraordinary Credits/(Charges) 1.6 2.6 0.4 0.8 1.4 Net Income Before Tax (0.8) 0.2 0.9 0.1 0.6 Provisions for Income Tax 0.2 0.4 0.2 0.3 0.6 Net Income After Tax (NIAT) (1.0) (0.1) 0.7 (0.2) . . . Growth Rates Total Operating Income (2.7 %) 1.8 % 17.8 % (0.7 %) 8.7 % Net Interest Income (2.5 %) 6.4 % 18.6 % (2.6 %) 12.7 % Interest Income (7.8 %) 10.1 % (11.8 %) 1.6 % 16.1 % Interest Expenses (11.2 %) 12.8 % (31.9 %) 6.5 % 19.7 % Non-interest Income (3.4 %) (9.7 %) 15.7 % 5.0 % (2.6 %) Fee-based Income 0.8 % 6.9 % (1.7 %) 12.7 % 18.5 % Trading Income 136.6 % (26.3 %) 224.3 % (15.4 %) (54.5 %) Trust Department Income (28.7 %) 13.4 % 45.3 % 23.8 % (13.1 %) Other Income (22.0 %) (27.8 %) (22.5 %) 11.9 % 0.0 % Operating Expenses 1.2 % 1.3 % (4.4 %) 7.5 % 8.9 % Bad Debts/Provisions for Probable Losses (9.6 %) (49.7 %) 64.4 % 16.0 % (7.4 %) Other Operating Expenses 2.8 % 7.7 % (8.4 %) 6.5 % 10.8 % Net Operating Income (Loss) (27.3 %) 1.6 % 120.8 % (234.4 %) (13.7 %) Extraordinary Credits/(Charges) (51.2 %) 60.1 % (85.2 %) 97.9 % 79.1 % Net Income Before Tax (152.9 %) 132.2 % 254.5 % (88.4 %) 503.2 % Provisions for Income Tax (62.6 %) 52.2 % (41.4 %) 63.5 % 62.1 % Net Income After Tax (NIAT) (225.2 %) 88.1 % 648.0 % (137.9 %) 117.5 % Selected Ratios Earning Asset Yield 1/ 13.1 % 13.8% 11.3 % 10.6 % 11.2 % Funding Cost 2/ 7.6 % 7.8% 5.0 % 4.8 % 5.1 % 3/ Interest Spread 5.5 % 6.0 % 6.4 % 5.8 % 6.1 % 4/ Net Interest Margin 5.4 % 5.5% 6.1 % 5.4 % 5.6 % Non-interest Income to Total Operating Income 28.4 % 25.2% 24.7 % 26.1 % 23.4 % 5/ Cost-to-Income Ratio 106.3 % 112.4% 87.4 % 93.8 % 95.6 % Return on Assets (ROA) 6/ (0.5 %) (0.1 %) 0.3 % (0.1 %) 0.0 % Return on Equity (ROE) 6/ (2.3 %) (0.3 %) 1.5 % (0.6 %) 0.1 % 1/ Earning Asset Yield refers to the ratio of interest income to average earning assets 2/ Funding Cost refers to the ratio of interest expenses to average interest-bearing liabilities 3/ Interest Spread refers to the difference between earning asset yield and funding cost 4/ Net Interest Margin refers to the ratio of net interest income to average earning assets 5/ Cost-to-Income Ratio refers to the ratio of operating expenses (exclusive of bad debts and provisions) to total operating income 6/ ROA and ROE refers to the ratio of annualized NIAT to average assets and capital, respectively. . . . Nil value due to rounding off: Net income after tax of P43.479 million.
Source: Supervisory Data Center, Supervision and Examination Sector
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
Table 22. Thrift Banking System: Asset Quality Indicators 1/
Major Accounts 2000 2001 2002 2003 2004
Levels (P Billion) Total Assets 233.2 245.2 253.4 274.3 305.4 Gross Assets 2/ 242.1 254.8 262.0 282.8 314.0 Total Loan Portfolio (TLP) 134.3 141.8 150.9 158.5 169.3 Interbank Loans Receivable (IBL) 6.2 4.9 7.6 5.9 6.1 Total Loan Portfolio (TLP), (exclusive of IBL) 128.1 136.9 143.2 152.6 163.2 Total Loan Portfolio (TLP), net (exclusive of IBL) 120.1 128.2 135.7 145.1 156.3 Non-performing Loans (NPL) 15.2 17.0 17.5 19.2 18.6 Loan Loss Reserves (LLR) 8.0 8.7 7.5 7.4 6.9 ROPOA, gross 3/ 21.0 26.2 27.1 29.1 34.7 Allowance for ROPOA 0.9 0.8 1.0 1.1 1.7 Restructured Loans (RL), gross 3.3 3.7 3.2 3.9 4.3 Restructured Loans (RL), performing 4/ 2.5 2.4 2.2 3.1 3.0 Distressed Assets 5/ 38.7 45.6 46.7 51.3 56.3 Non-performing Assets (NPAs) 6/ 36.2 43.2 44.5 45.7 49.8 Allowance for Probable Losses on NPAs 8.9 9.5 8.6 8.5 8.6 Growth Rates Total Assets 8.3 % 5.1 % 3.3 % 8.2 % 11.4 % Gross Assets 2/ 8.1 % 5.2 % 2.8 % 8.0 % 11.0 % TLP 4.9 % 5.5 % 6.4 % 5.1 % 6.8 % IBL (26.0 %) (22.0 %) 56.8 % (22.0 %) 2.2 % TLP (exclusive of IBL) 7.0 % 6.9 % 4.6 % 6.5 % 7.0 % TLP, net (exclusive of IBL) 7.4 % 6.8 % 5.9 % 6.9 % 7.7 % NPL (17.4 %) 11.9 % 2.6 % 9.7 % (3.1 %) LLR 1.2 % 8.2 % (13.4 %) (1.2 %) (7.6 %) 3/ ROPOA, gross 12.4 % 24.6 % 3.5 % 7.4 % 19.2 % Allowance for ROPOA 14.1 % (2.3 %) 22.8 % 8.1 % 52.5 % RL, gross 50.8 % 12.9 % (14.2 %) 23.2 % 9.7 % RL, performing 4/ 58.2 % (5.4 %) (8.1 %) 42.5 % (1.8 %) Distressed Assets 5/ 0.1 % 17.7 % 2.6 % 9.9 % 9.6 % NPAs 6/ (2.4 %) 19.3 % 3.1 % 2.6 % 9.0 % Allowance for Probable Losses on NPAs 2.3 % 7.2 % (10.2 %) (0.1 %) 0.2 % Selected Ratios RL to TLP 2.4 % 2.6 % 2.1 % 2.5 % 2.5 % LLR to TLP 6.0 % 6.1 % 5.0 % 4.7 % 4.1 % NPL Ratio (inclusive of IBL) 11.3 % 12.0 % 11.6 % 12.1 % 11.0 % NPL Ratio (exclusive of IBL) 11.9 % 12.4 % 12.2 % 12.6 % 11.4 % NPL Coverage 7/ 52.8 % 51.1 % 43.1 % 38.8 % 37.0 % NPA to Gross Assets 15.0 % 17.0 % 17.0 % 16.2 % 15.9 % 8/ NPA Coverage 24.5 % 22.1 % 19.2 % 18.7 % 17.2 % Distressed Assets Ratio 9/ 24.9 % 27.1 % 26.3 % 27.4 % 27.6 % 1/ Asset Quality Indicators defined per BSP Circular No. 202 dated 27 May 1999 amended by BSP Circular No. 351 dated 19 September 2002 2/ Gross Assets refers to Total Assets, net of reserves plus Loan Loss Reserves (LLR) plus provision for ROPOA 3/ ROPOA refers to Real and Other Properties Owned or Acquired 4/ Data as of end-2000 to end-2003 are based on current RLs. Figures for end-2004 and subsequent years are based on performing RLs. 5/ Distressed Assets refers to NPLs plus ROPOA, gross and Current RLs from end-2000 to end-2003. Performing RLs replaced current RLs from end-2004 and subsequent years. 6/ NPA refers to NPLs plus ROPOA, gross excluding performing sales contracts receivable per BSP Circular No. 380 dated 28 March 2003 7/ NPL Coverage refers to the ratio of LLR to NPL 8/ NPA Coverage refers to the ratio of valuation reserves (for Loans and ROPOA) to NPAs 9/ Distressed Assets Ratio refers to the ratio of Distressed Assets to TLP plus ROPOA, gross
Source: Supervisory Data Center, Supervision and Examination Sector
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
Table 23. Rural Banking System: Financial Highlights
Levels (P Billion) 2000 2001 2002 2003 2004p/
Income Statement Total Operating Income 5.8 6.4 7.1 8.0 9.2 Net Interest Income 3.8 4.1 4.7 5.6 6.5 Non-interest Income 2.0 2.2 2.4 2.4 2.7 Operating Expenses 5.1 5.6 6.3 6.8 7.7 Bad Debts/Provisions for Probable Losses 0.1 0.1 0.2 0.2 0.3 Other Operating Expenses 5.0 5.4 6.1 6.6 7.4 Net Operating Income 0.7 0.8 0.8 1.2 1.4 Extraordinary Credits/(Charges) 0.4 0.3 0.4 0.4 0.5 Net Income Before Tax 1.1 1.2 1.2 1.6 1.9 Provisions for Income Tax 0.2 0.2 0.2 0.2 0.3 Net Income After Tax (NIAT) 0.9 1.0 1.0 1.4 1.6 Balance Sheet Total Assets 60.2 66.6 75.6 84.0 93.8 Cash and Due from Banks 11.2 12.3 14.3 16.9 17.2 Loans, gross 38.4 41.7 46.8 51.8 58.7 Allowance for Probable Losses 2.0 2.3 2.4 2.5 2.9 Loans, net 36.4 39.4 44.4 49.3 55.8 Investments, net 2.5 3.2 3.9 4.4 5.7 ROPOA, net 5.2 6.3 7.1 7.0 7.6 Other Assets 5.0 5.3 5.9 6.4 7.5 Total Liabilities 50.0 55.6 63.2 70.6 79.1 Deposits 39.2 44.7 51.9 58.9 66.6 Bills Payable 6.9 6.7 7.1 6.9 7.2 Special Financing 0.2 0.1 0.2 0.1 0.1 Other Liabilities 3.7 4.1 4.1 4.7 5.2 Total Capital Accounts 10.2 11.0 12.3 13.4 14.7 p/ Preliminary
Source: Supervisory Data Center, Supervision and Examination Sector
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
Table 24. Rural Banking System: Selected Performance Indicators
Growth Rates 2000 2001 2002 2003 2004p/ Income Statement Total Operating Income 1.9 % 9.6 % 11.3 % 12.6 % 14.6 % Net Interest Income 5.9 % 10.2 % 13.7 % 17.9 % 16.1 % Non-interest Income (4.7 %) 8.6 % 6.9 % 2.2 % 11.1 % Operating Expenses 2.6 % 8.9 % 13.0 % 7.8 % 13.8 % Bad Debts/Provisions for Probable Losses (38.1 %) (10.4 %) 56.7 % 5.3 % 50.1 % Other Operating Expenses 4.6 % 9.4 % 12.0 % 7.8 % 12.6 % Net Operating Income (3.0 %) 15.1 % (0.7 %) 50.7 % 18.9 % Extraordinary Credits 2,978.3 % (4.2 %) 18.7 % (2.3 %) 18.7 % Net Income Before Tax 44.0 % 8.6 % 5.1 % 32.9 % 18.9 % Provisions for Income Tax 23.3 % 4.8 % 13.6 % 22.3 % 18.2 % Net Income After Tax (NIAT) 48.7 % 9.4 % 3.6 % 35.0 % 19.0 % Balance Sheet Total Assets 8.8 % 10.6 % 13.5 % 11.2 % 11.7 % Cash and Due from Banks 19.0 % 10.0 % 16.6 % 18.4 % 1.8 % Loans, gross 1.0 % 8.6 % 12.2 % 10.7 % 13.3 % Allowance for Probable Losses 15.2 % 16.2 % 5.7 % 4.3 % 14.5 % Loans, net 0.3 % 8.2 % 12.5 % 11.1 % 13.2 % Investments, net 90.4 % 31.1 % 19.6 % 14.0 % 30.1 % ROPOA, net 44.3 % 22.0 % 11.7 % (1.5 %) 9.3 % Other Assets 3.9 % 7.4 % 11.4 % 7.8 % 16.3 % Total Liabilities 8.4 % 11.3 % 13.7 % 11.6 % 12.1 % Deposits 15.9 % 14.1 % 16.0 % 13.5 % 13.1 % Bills Payable (10.1 %) (3.0 %) 6.3 % (3.7 %) 4.4 % Special Financing (3.7 %) (20.7 %) 8.0 % (20.6 %) 7.7 % Other Liabilities (16.1 %) 10.6 % 0.8 % 15.3 % 10.3 % Total Capital Accounts 10.3 % 7.1 % 12.4 % 8.8 % 9.7 % Selected Ratios Profitability Cost to Income 85.4% 85.3% 85.8% 82.1% 80.7% Return on Assets (ROA) 1.5% 1.5% 1.4% 1.7% 1.8% Return on Equity (ROE) 9.2% 9.2% 8.7% 10.6% 11.6% Liquidity Cash and Due from Banks to Deposits 28.5% 27.4% 27.6% 28.8% 25.9% Liquid Assets to Deposits 1/ 34.2% 34.3% 34.8% 36.0% 34.3% Loans, gross to Deposits 98.0% 93.3% 90.2% 88.0% 88.1% Asset quality Non-performing Loans (NPL exclusive of IBL) 17.4% 15.0% 13.9% 12.1% 11.5% NPL Coverage 29.3% 36.4% 34.9% 36.1% 37.4% Non-performing Assets (NPA) to Gross Assets 19.3% 18.5% 17.6% 15.5% 15.1% NPA Coverage 17.4% 19.0% 17.8% 18.3% 19.0% Distressed Assets 29.7% 28.4% 27.0% 23.7% 22.7% Capital Adequacy Capital Adequacy Ratio (CAR) 2/ 17.5% 17.3% 16.6% 16.5% 16.2%a/ Total Capital Accounts to Total Assets 17.0% 16.5% 16.3% 16.0% 15.7%
1/ Liquid assets refers to Cash and Due from Banks plus Investments, net (less equity investments, net) 2/ Based on Circular No. 280 dated 29 March 2001, formally adapted 1 July 2001 except end-December 2000 which were based on the Net Worth-to-Risk Assets ratio provided under Section 22 of R.A. No. 337 p/ Preliminary a/ As of end-June 2004
Source: Supervisory Data Center, Supervision and Examination Sector
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
Table 25. Rural Banking Offices: Regional Profile
2004 Branches 2003 Head Total /Other Offices Offices
Nationwide 1,818 1,897 720 1,177
National Capital Region (NCR) 66 66 26 40
Luzon 1,190 1,230 425 805
Region I - Ilocos 181 185 65 120 Region II - Cagayan 118 124 31 93 Region III - Central Luzon 288 302 97 205 Region IV-A - CALABARZON 430 442 143 299 Region IV-B - MIMAROPA 51 51 25 26 Region V - Bicol 85 86 47 39 Cordillera Autonomous Region (CAR) 37 40 17 23
Visayas 276 289 152 137
Region VI - Western Visayas 117 123 74 49 Region VII - Central Visayas 116 119 53 66 Region VIII - Eastern Visayas 43 47 25 22
Mindanao 286 312 117 195
Region IX - Western Mindanao 26 29 14 15 Region X - Northern Mindanao 77 82 43 39 Region XI - Southern Mindanao 67 75 20 55 Region XII - Central Mindanao 58 61 20 41 Autonomous Region of Muslim Mindanao (ARMM) 5 5 4 1 CARAGA 53 60 16 44
Source: Supervisory Data Center, Supervision and Examination Sector
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
Table 26. Rural Banking System: Profitability Indicators
p/ Levels (P Billion) 2000 2001 2002 2003 2004 Total Operating Income 5.8 6.4 7.1 8.0 9.2 Net Interest Income 3.8 4.1 4.7 5.6 6.5 Interest Income 7.6 8.3 8.7 9.4 10.8 Interest Expenses 3.8 4.1 4.0 3.8 4.3 Non-interest Income 2.0 2.2 2.4 2.4 2.7 Fee-based Income 1.4 1.5 1.7 1.8 2.0 Other Income 0.6 0.6 0.6 0.6 0.7 Operating Expenses 5.1 5.6 6.3 6.8 7.7 Bad Debts/Provisions for Probable Losses 0.1 0.1 0.2 0.2 0.3 Other Operating Expenses 5.0 5.4 6.1 6.6 7.4 Net Operating Income 0.7 0.8 0.8 1.2 1.4 Extraordinary Credits/(Charges) 0.4 0.3 0.4 0.4 0.5 Net Income Before Tax 1.1 1.2 1.2 1.6 1.9 Provision for Income Tax 0.2 0.2 0.2 0.2 0.3 Net Income After Tax (NIAT) 0.9 1.0 1.0 1.4 1.6 Growth Rates
Total Operating Income 1.9 % 9.6 % 11.3 % 12.6 % 14.6 % Net Interest Income 5.9 % 10.2 % 13.7 % 17.9 % 16.1 % Interest Income (1.2 %) 8.6 % 5.2 % 7.9 % 15.1 % Interest Expenses (7.4 %) 7.1 % (3.3 %) (4.0 %) 13.7 % Non-interest Income (4.7 %) 8.6 % 6.9 % 2.2 % 11.1 % Fee-based Income 8.8 % 10.0 % 10.5 % 6.4 % 8.2 % Other income (29.5 %) 6.5 % (0.6 %) (8.4 %) 21.8 % Operating Expenses 2.6 % 8.9 % 13.0 % 7.8 % 13.8 % Bad Debts/Provisions for Probable Losses (38.1 %) (10.4 %) 56.7 % 5.3 % 50.1 % Other Operating Expenses 4.6 % 9.4 % 12.0 % 7.8 % 12.6 % Net Operating Income (3.0 %) 15.1 % (0.7 %) 50.7 % 18.9 % Extraordinary Credits/(Charges) 2,978.3 % (4.2 %) 18.7 % (2.3 %) 18.7 % Net Income Before Tax 44.0 % 8.6 % 5.1 % 32.9 % 18.9 % Provision for Income Tax 23.3 % 4.8 % 13.6 % 22.3 % 18.2 % Net Income After Tax (NIAT) 48.7 % 9.4 % 3.6 % 35.0 % 19.0 % Selected Ratios
Earning Asset Yield1 / 19.0 % 19.3 % 18.2 % 17.6 % 17.9 % Funding Cost 2/ 8.7 % 8.4 % 7.2 % 6.1 % 6.2 % 3/ Interest Spread 10.3 % 10.9 % 11.0 % 11.5 % 11.7 % Net Interest Margin4/ 9.4 % 9.7 % 9.9 % 10.4 % 10.7 % Non-interest Income to Total Operating Income 35.3 % 34.9 % 33.5 % 30.4 % 29.5 % Cost-to-Income 5/ 85.4 % 85.3 % 85.8 % 82.1 % 80.7 % Return on Assets (ROA)6/ 1.5 % 1.5 % 1.4 % 1.7 % 1.8 % Return on Equity (ROE) 6/ 9.2 % 9.2 % 8.7 % 10.6 % 11.6 %
1/ Earning Asset Yield refers to the ratio of interest income to average earning assets 2/ Funding Cost refers to the ratio of interest expenses to average interest-bearing liabilities 3/ Interest Spread refers to the difference between earning asset yield and funding cost 4/ Net Interest Margin refers to the ratio of net interest income to average earning assets 5/ Cost -to-Income Ratio refers to the ratio of operating expenses (exclusive of bad debts and provisions) to total operating income 6/ ROA and ROE refers to the ratio of annualized NIAT to average assets and capital, respectively. p/ Preliminary
Source: Supervisory Data Center, Supervision and Examination Sector
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
Table 27. Rural Banking System: Regional Profitability Indicators
End- December 2004p/
Earning Funding Interest Net Interest Cost to Return on Return on Region Asset Yield Cost Spread Margin Income Asset (ROA) Equity (ROE)
Industry 17.9 % 6.2 % 11.7 % 10.7 % 80.7 % 1.8 % 11.6 %
NCR 19.5 % 8.0 % 11.6 % 10.5 % 88.7 % 1.1 % 10.1 %
Region 1 14.7 % 5.4 % 9.2 % 8.4 % 81.1 % 1.9 % 14.5 %
Region 2 18.3 % 7.3 % 11.0 % 10.2 % 83.6 % 1.8 % 12.2 %
Region 3 16.2 % 5.5 % 10.7 % 9.6 % 82.7 % 1.9 % 11.1 %
CALABARZON 17.0 % 5.8 % 11.2 % 9.4 % 86.8 % 1.3 % 8.4 %
MIMAROPA 18.0 % 6.6 % 11.4 % 10.0 % 75.7 % 2.4 % 12.7 %
Region 5 15.7 % 8.7 % 6.9 % 6.3 % 91.7 % 0.5 % 3.7 %
Region 6 16.0 % 5.6 % 10.4 % 10.4 % 80.8 % 1.3 % 9.0 %
Region 7 24.6 % 8.2 % 16.5 % 14.0 % 83.6 % 1.6 % 11.1 %
Region 8 17.2 % 7.3 % 9.9 % 9.6 % 102.5 % (0.5 %) (2.7 %)
Region 9 18.4 % 5.4 % 13.0 % 13.7 % 69.8 % 2.5 % 10.8 %
Region 10 20.3 % 5.6 % 14.7 % 15.6 % 66.1 % 3.7 % 11.2 %
Region 11 17.8 % 3.3 % 14.4 % 14.0 % 66.0 % 4.1 % 26.6 %
Region 12 18.4 % 4.1 % 14.3 % 14.1 % 76.6 % 2.7 % 14.8 %
CAR 15.1 % 3.5 % 11.6 % 11.6 % 67.3 % 3.1 % 16.7 %
ARMM 25.5 % 4.5 % 21.0 % 21.9 % 47.2 % 12.0 % 31.4 %
CARAGA 25.9 % 8.0 % 17.9 % 17.9 % 75.0 % 4.0 % 23.0 %
p/ Preliminary
Source: Supervisory Data Center, Supervision and Examination Sector
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
Table 28. Rural Banking System: Asset Quality Indicators1 /
Major Accounts 2000 2001 2002 2003 2004 p/
Levels (P Billion) Total Assets 60.2 66.6 75.6 84.0 93.8 Gross Assets 2/ 62.3 69.0 78.0 86.5 96.6 Total Loan Portfolio (TLP) 38.4 41.7 46.6 51.6 58.3 Non-performing Loans (NPL) 6.7 6.3 6.5 6.2 6.7 Loan Loss Reserves (LLR) 2.0 2.3 2.3 2.3 2.5 ROPOA, gross 3/ 5.3 6.5 7.3 7.2 7.9 Allowance for ROPOA 0.1 0.1 0.2 0.2 0.3 Restructured Loans (RL), gross 1.1 1.1 1.1 0.7 0.6 Restructured Loans (RL), performing 4/ 1.0 0.9 0.8 0.5 0.4 Distressed Assets5/ 13.0 13.7 14.5 13.9 15.0 6/ Non-performing Assets (NPAs) 12.0 12.8 13.7 13.4 14.6 Allowance for Probable Losses on NPAs 2.1 2.4 2.4 2.5 2.8
Growth Rates Total Assets 8.8 % 10.6 % 13.5 % 11.2 % 11.7 % Gross Assets 2/ 9.2 % 10.8 % 13.0 % 10.8 % 11.8 % TLP 1.0 % 8.6 % 11.8 % 10.5 % 13.2 % NPL (7.6 %) (6.4 %) 3.1 % (3.6 %) 8.0 % LLR 15.2 % 16.2 % (1.1 %) (0.2 %) 12.0 % 3/ ROPOA, gross 47.9 % 21.8 % 12.0 % (1.3 %) 9.9 % Allowance for ROPOA 100.0 % 12.9 % 23.5 % 6.4 % 31.0 % RL, gross 100.0 % (4.1 %) 1.5 % (40.3 %) (4.1 %) 4/ RL, performing 100.0 % (2.4 %) (14.9 %) (39.3 %) (11.3 %) 5/ Distressed Assets 19.7 % 5.5 % 6.1 % (4.4 %) 8.3 % 6/ NPAs 10.8 % 6.1 % 7.6 % (2.4 %) 9.0 % Allowance for Probable Losses on NPAs 22.8 % 16.0 % 0.4 % 0.3 % 13.5 % Selected Ratios RL to TLP 2.9 % 2.6 % 2.3 % 1.3 % 1.1 % LLR to TLP 5.1 % 5.5 % 4.8 % 4.4 % 4.3 % NPL Ratio 17.4 % 15.0 % 13.9 % 12.1 % 11.5 % 7/ NPL Coverage 29.3 % 36.4 % 34.9 % 36.1 % 37.4 % NPA to Gross Assets 19.3 % 18.5 % 17.6 % 15.5 % 15.1 % NPA Coverage 8/ 17.4 % 19.0 % 17.8 % 18.3 % 19.0 % 9/ Distressed Assets Ratio 29.7 % 28.4 % 27.0 % 23.7 % 22.7 %
1/ Asset Quality Indicators defined per BSP Circular No.202 dated 27 May 1999 amended by BSP Circular No. 351 dated 19 September 2002 2/ Gross Assets refers to Total Assets, net of reserves plus Loan Loss Reserves (LLR) plus provision for ROPOA 3/ ROPOA refers to Real and Other Properties Owned or Acquired 4/ Data as of end-2000 to end-2003 are based on current and past due restructured loans. Figures for end-2004 and subsequent years are based on performing and non-performing RLs. 5/ Distressed Assets refers to NPLs plus ROPOA, gross and Current RLs from end-2000 to end-2003. Performing RLs replaced current RLs from end-2004 and subsequent years. 6/ NPA refers to NPLs plus ROPOA, gross excluding performing sales contracts receivable per BSP Circular No. 380 dated 28 March 2003. 7/ NPL Coverage refers to the ratio of LLR to NPL. 8/ NPA Coverage refers to the ratio of valuation reserves (for Loans and ROPOA) to NPAs. 9/ Distressed Assets Ratio refers to the ratio of Distressed Assets to TLP plus ROPOA, gross p/ Preliminary
Source: Supervisory Data Center, Supervision and Examination Sector
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
Table 29. Cooperative Banking System: Financial Highlights
Levels (P Billion) 2000 2001 2002 2003 2004p/
Income Statement Total Operating Income 0.5 0.5 0.6 0.6 0.7 Net Interest Income 0.2 0.3 0.3 0.3 0.4 Non-interest Income 0.3 0.3 0.3 0.3 0.3 Operating Expenses 0.4 0.4 0.5 0.5 0.6 Bad Debts/Provisions for Probable Losses ...... Other Operating Expenses 0.4 0.4 0.5 0.5 0.6 Net Operating Income . . . 0.1 0.1 0.1 0.1 Extraordinary Credits/(Charges) ...... Net Income Before Tax . . . 0.1 0.1 0.1 0.1 Provisions for Income Tax ...... Net Income After Tax (NIAT) . . . 0.1 0.1 0.1 0.1 Balance Sheet Total Assets 5.0 4.7 5.3 5.7 6.4 Cash and Due from Banks 0.5 0.6 0.8 0.8 0.9 Loans, gross 3.9 3.6 4.0 4.2 4.8 Allowance for Probable Losses 0.2 0.2 0.2 0.2 0.3 Loans, net 3.7 3.4 3.8 4.0 4.5 Investments, net 0.1 0.1 0.2 0.2 0.2 ROPOA, net 0.3 0.2 0.2 0.2 0.3 Other Assets 0.5 0.4 0.4 0.4 0.4 Total Liabilities 4.4 3.9 4.5 4.7 5.3 Deposits 2.2 2.3 2.9 3.3 3.7 Bills Payable 1.7 1.2 1.2 1.1 1.3 Special Financing 0.1 0.1 ...... Other Liabilities 0.5 0.3 0.3 0.3 0.3 Total Capital Accounts 0.6 0.8 0.8 1.0 1.1
p/ Preliminary . . . Less than P0.05 billion
Source: Supervisory Data Center, Supervision and Examination Sector
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
Table 30. Cooperative Banking System: Selected Performance Indicators
Growth Rates 2000 2001 2002 2003 2004 p/ Income Statement Total Operating Income (7.2 %) 14.0 % 17.8 % 4.3 % 13.4 % Net Interest Income (9.2 %) 36.3 % 18.4 % 7.0 % 9.9 % Non-interest Income (5.6 %) (2.9 %) 17.2 % 1.5 % 17.3 % Operating Expenses (1.1 %) 0.7 % 17.3 % 0.4 % 14.1 % Bad Debts/Provisions for Probable Losses (35.3 %) 90.1 % (8.0 %) 42.9 % 96.9 % Other Operating Expenses (0.3 %) (0.7 %) 18.0 % (0.5 %) 11.4 % Net Operating Income (68.2 %) 429.6 % 20.9 % 27.0 % 10.0 % Extraordinary Credits/(Charges) 8,001.0 % 99.4 % 71.9 % 20.2 % 6.9 % Net Income Before Tax (59.7 %) 359.1 % 25.6 % 26.1 % 9.6 % Provisions for Income Tax 0.0 % (90.5 %) 14.5 % 473.6 % (42.7 %) Net Income After Tax (NIAT) (61.6 %) 382.3 % 25.6 % 25.7 % 9.9 % Balance Sheet Total Assets 9.0 % (7.1 %) 14.3 % 6.2 % 13.4 % Cash and Due from Banks 10.0 % 18.7 % 34.7 % 8.3 % 12.6 % Loans, gross 8.4 % (6.4 %) 9.9 % 5.1 % 14.9 % Allowance for Probable Losses 17.6 % 3.9 % 9.3 % 0.3 % 18.6 % Loans, net 8.0 % (7.0 %) 9.9 % 5.4 % 14.7 % Investments, net 43.5 % 2.5 % 39.3 % 17.2 % 8.6 % ROPOA, net 16.8 % (26.9 %) 19.6 % 6.7 % 13.5 % Other Assets 5.6 % (25.2 %) 12.1 % 4.1 % 5.4 % Total Liabilities 8.4 % (12.3 %) 15.5 % 4.7 % 13.2 % Deposits 22.0 % 6.4 % 25.2 % 11.8 % 13.6 % Bills Payable 38.9 % (29.1 %) 1.6 % (9.6 %) 15.8 % Special Financing (21.4 %) (14.1 %) (8.7 %) (14.7 %) (0.3 %) Other Liabilities (49.7 %) (37.8 %) (0.8 %) (3.9 %) 0.4 % Total Capital Accounts 14.5 % 32.5 % 8.5 % 13.9 % 14.6 % Selected Ratios
Profitability Cost to Income 95.5% 83.2% 83.4% 79.5% 78.1% Return on Assets (ROA) 0.4% 1.7% 2.1% 2.4% 2.4% Return on Equity (ROE) 3.1% 12.0% 12.7% 14.4% 13.8% Liquidity Cash and Due from Banks to Deposits 21.9% 24.4% 26.3% 25.5% 25.2% Liquid Assets to Deposits 1/ 26.9% 29.3% 31.9% 31.4% 31.0% Loans, gross to Deposits 175.7% 154.5% 135.6% 127.5% 128.9% Asset quality Non-performing Loans (NPL exclusive of IBL 24.7% 16.3% 14.9% 12.0% 12.0% NPL Coverage 20.6% 34.6% 34.2% 39.8% 38.2% Non-performing Assets (NPA) to Gross Asset 23.4% 16.1% 14.8% 12.7% 12.8% NPA Coverage 16.7% 26.7% 25.2% 27.3% 26.3% Distressed Assets 31.2% 23.3% 22.3% 19.5% 19.1% Capital Adequacy 2/ Capital Adequacy Ratio (CAR) 9.5% 16.2% 15.4% 14.6% 14.6%a/ Total Capital Accounts to Total Assets 11.6% 16.6% 15.8% 16.9% 17.1%
1/ Liquid assets refers to Cash and Due from Banks plus Investments, net (less equity investments, net) 2/ Based on Circular No. 280 dated 29 March 2001, formally adapted 1 July 2001 except end-December 2000 and 2001 which were based on the Net Worth-to-Risk Assets ratio provided under Section 22 of R.A. No. 337 p/ Preliminary a/ As of end-June 2004
Source: Supervisory Data Center, Supervision and Examination Sector
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
Table 31. Cooperative Banking Offices: Regional Profile
2004
2003 Head Branches/ Total Offices Other Offices
Nationwide 103 106 44 62
National Capital Region (NCR) 1 1 1
Luzon 61 64 23 41
Region I - Ilocos 8 8 3 5 Region II - Cagayan 8 10 3 7 Region III - Central Luzon 24 24 7 17 Region IV-A - CALABARZON 9 10 3 7 Region IV-B - MIMAROPA 5 5 2 3 Region V - Bicol 5 5 3 2 Cordillera Autonomous Region (CAR) 2 2 2
Visayas 17 17 9 8
Region VI - Western Visayas 7 7 3 4 Region VII - Central Visayas 8 8 4 4 Region VIII - Eastern Visayas 2 2 2
Mindanao 24 24 11 13
Region IX - Western Mindanao 2 2 2 Region X - Northern Mindanao 15 15 4 11 Region XI - Southern Mindanao 1 1 1 Region XII - Central Mindanao 3 3 1 2 Autonomous Region of Muslim Mindanao (ARMM) - - CARAGA 3 3 3
Source: Supervisory Data Center, Supervision and Examination Sector
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
Table 32. Cooperative Banking System: Profitability Indicators
Levels (P Billion) 2000 2001 2002 2003 2004p/
Total Operating Income 0.5 0.5 0.6 0.6 0.7 Net Interest Income 0.2 0.3 0.3 0.3 0.4 Interest Income 0.6 0.6 0.7 0.7 0.8 Interest Expenses 0.4 0.3 0.4 0.4 0.4 Non-interest Income 0.3 0.3 0.3 0.3 0.3 Fee-based Income 0.2 0.2 0.2 0.2 0.3 Other Income 0.1 0.1 0.1 0.1 0.1 Operating Expenses 0.4 0.4 0.5 0.5 0.6 Bad Debts/Provisions for Probable Losses ...... Other Operating Expenses 0.4 0.4 0.5 0.5 0.6 Net Operating Income . . . 0.10.10.10.1 Extraordinary Credits/(Charges) ...... Net Income Before Tax . . . 0.1 0.1 0.1 0.1 Provision for Income Tax ...... Net Income After Tax (NIAT) . . . 0.10.10.10.1 Growth Rates Total Operating Income (7.2 %) 14.0 % 17.8 % 4.3 % 13.4 % Net Interest Income (9.2 %) 36.3 % 18.4 % 7.0 % 9.9 % Interest Income (1.4 %) 3.9% 14.1% 2.9% 12.2% Interest Expenses 3.3 % (13.1 %) 10.5 % (0.7 %) 14.3 % Non-interest Income (5.6 %) (2.9 %) 17.2 % 1.5 % 17.3 % Fee-based Income 8.3% 8.2% 15.4% 3.9% 12.0% Other income (28.2 %) (27.8 %) 23.1 % (5.8 %) 37.5 % Operating Expenses (1.1 %) 0.7% 17.3% 0.4% 14.1% Bad Debts/Provisions for Probable Losses (35.3 %) 90.1 % (8.0 %) 42.9 % 96.9 % Other Operating Expenses (0.3 %) (0.7 %) 18.0 % (0.5 %) 11.4 % Net Operating Income (68.2 %) 429.6 % 20.9 % 27.0 % 10.0 % Extraordinary Credits/(Charges) 8,001.0 % 99.4 % 71.9 % 20.2 % 6.9 % Net Income Before Tax (59.7 %) 359.1 % 25.6 % 26.1 % 9.6 % Provision for Income Tax 300.0 % (90.5 %) 14.5 % 473.6 % (42.7 %) Net Income After Tax (NIAT) (61.6 %) 382.3 % 25.6 % 25.7 % 9.9 % Selected Ratios 1/ Earning Asset Yield 14.9 % 15.3 % 17.1 % 16.3 % 16.5 % Funding Cost 2/ 10.9% 8.8% 9.4% 8.4% 8.7% Interest Spread3 / 4.0% 6.5% 7.7% 7.9% 7.8% Net Interest Margin 4/ 5.1% 6.9% 8.0% 7.9% 7.9% Non-interest Income to Total Operating Inco 57.0 % 48.6 % 48.3 % 47.0 % 48.6 % Cost-to-Income 5/ 95.5 % 83.2 % 83.4 % 79.5 % 78.1 % Return on Assets (ROA)6/ 0.4% 1.7% 2.1% 2.4% 2.4% Return on Equity (ROE) 6/ 3.1 % 12.0 % 12.7 % 14.4 % 13.8 %
1/ Earning Asset Yield refers to the ratio of interest income to average earning assets 2/ Funding Cost refers to the ratio of interest expenses to average interest-bearing liabilities 3/ Interest Spread refers to the difference between earning asset yield and funding cost 4/ Net Interest Margin refers to the ratio of net interest income to average earning assets 5/ Cost -to-Income Ratio refers to the ratio of operating expenses (exclusive of bad debts and provisions) to total operating income 6/ ROA and ROE refers to the ratio of annualized NIAT to average assets and capital, respectively. p/ Preliminary . . . Less than P0.05 billion
Source: Supervisory Data Center, Supervision and Examination Sector
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
Table 33. Cooperative Banking System: Regional Profitability Indicators
End- December 2004 p/
Earning Funding Interest Net Interest Cost to Return on Return on Region Asset Yield Cost Spread Margin Income Asset (ROA) Equity (ROE)
Industry 16.5% 8.7% 7.8% 7.9% 78.1% 2.4% 13.8%
NCR 14.4% 7.3% 7.1% 7.5% 64.3% 1.7% 5.9%
Region 1 16.4% 8.5% 7.9% 7.9% 74.9% 2.5% 25.3%
Region 2 23.4% 7.3% 16.1% 15.6% 71.3% 4.3% 19.6%
Region 3 14.3% 9.4% 5.0% 4.6% 84.7% 1.5% 13.9%
CALABARZON 17.8% 5.4% 12.4% 11.7% 82.1% 2.1% 12.1%
MIMAROPA 22.0% 7.7% 14.3% 15.7% 69.3% 3.9% 15.2%
Region 5 16.8% 8.8% 8.0% 10.5% 85.3% 2.0% 8.1%
Region 6 14.8% 14.1% 0.7% 0.2% 91.0% 0.5% 5.1%
Region 7 17.0% 8.3% 8.7% 9.4% 68.6% 3.3% 13.8%
Region 8 21.0% 9.7% 11.3% 12.0% 75.6% 3.6% 18.5%
Region 9 15.2% 9.7% 5.5% 6.5% 74.3% 2.1% 9.6%
Region 10 16.3% 7.9% 8.4% 8.5% 89.4% 1.9% 11.6%
Region 11 12.2% 6.0% 6.2% 8.5% 94.4% 0.2% 1.0%
Region 12 20.1% 7.8% 12.3% 13.8% 63.0% 7.4% 31.7%
CAR 17.7% 6.4% 11.3% 10.0% 58.7% 4.0% 17.7%
ARMM 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
CARAGA 15.9% 4.3% 11.6% 12.5% 80.2% 2.3% 7.5% p/ Preliminary
Source: Supervisory Data Center, Supervision and Examination Sector
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
Table 34. Cooperative Banking System: Asset Quality Indicators1/
Major Accounts 2000 2001 2002 2003 2004p/
Levels (P Billion)
Total Assets 5.0 4.7 5.3 5.7 6.4 Gross Assets 2/ 5.2 4.9 5.5 5.9 6.6 Total Loan Portfolio (TLP) 3.9 3.6 4.0 4.2 4.8 Non-performing Loans (NPL) 1.0 0.6 0.6 0.5 0.6 Loan Loss Reserves (LLR) 0.2 0.2 0.2 0.2 0.2 ROPOA, gross3 / 0.3 0.2 0.2 0.2 0.3 Allowance for ROPOA ...... Restructured Loans (RL), gross 0.1 0.1 0.1 0.1 0.1 4/ Restructured Loans (RL), performing 0.1 0.1 0.1 0.1 0.1 Distressed Assets5/ 1.3 0.9 0.9 0.9 1.0 6/ Non-performing Assets (NPAs) 1.2 0.8 0.8 0.7 0.9 Allowance for Probable Losses on NPAs 0.2 0.2 0.2 0.2 0.2 Growth Rates Total Assets 9.0 % (7.1 %) 14.3 % 6.2 % 13.4 % Gross Assets 2/ 9.5 % (6.7 %) 13.7 % 5.9 % 13.3 % TLP 8.4% (6.4 %) 9.3% 5.0% 14.4% NPL 5.7 % (38.2 %) (0.0 %) (15.4 %) 14.5 % LLR 17.6 % 3.9 % (1.2 %) (1.6 %) 9.8 % ROPOA, gross3/ 20.0 % (27.1 %) 19.2 % 6.4 % 13.4 % Allowance for ROPOA 300.0 % (33.8 %) 2.1 % (7.9 %) 8.5 % RL, gross 300.0 % 48.1 % 5.9 % (2.6 %) 3.8 % 4/ RL, performing 300.0 % 50.3 % 9.0 % (1.0 %) (1.5 %) Distressed Assets 5/ 14.5 % (31.3 %) 5.2 % (8.3 %) 12.1 % NPAs 6/ 8.5 % (35.8 %) 4.7 % (9.3 %) 14.2 % Allowance for Probable Losses on NPAs 21.9 % 2.5 % (1.1 %) (1.7 %) 9.8 % Selected Ratios
RL to TLP 2.1% 3.3% 3.2% 3.0% 2.7% LLR to TLP 5.1% 5.7% 5.1% 4.8% 4.6% NPL Ratio 24.7 % 16.3 % 14.9 % 12.0 % 12.0 % NPL Coverage 7/ 20.6 % 34.6 % 34.2 % 39.8 % 38.2 % NPA to Gross Assets 23.4 % 16.1 % 14.8 % 12.7 % 12.8 % NPA Coverage 8/ 16.7 % 26.7 % 25.2 % 27.3 % 26.3 % Distressed Assets Ratio9/ 31.2 % 23.3 % 22.3 % 19.4 % 19.1 %
1/ Asset Quality Indicators defined per BSP Circular No.202 dated 27 May 1999 amended by BSP Circular No. 351 dated 19 September 2002 2/ Gross Assets refers to Total Assets, net of reserves plus Loan Loss Reserves (LLR) plus provision for ROPOA 3/ ROPOA refers to Real and Other Properties Owned or Acquired 4/ Data as of end-2000 to end-2003 are based on current and past due restructured loans. Figures for end-2004 and subsequent years are based on performing and non-performing RLs. 5/ Distressed Assets refers to NPLs plus ROPOA, gross and Current RLs from end-2000 to end-2003. Performing RLs replaced current RLs from end-2004 and subsequent years. 6/ NPA refers to NPLs plus ROPOA, gross excluding performing sales contracts receivable per BSP Circular No. 380 dated 28 March 2003 7/ NPL Coverage refers to the ratio of LLR to NPL. 8/ NPA Coverage refers to the ratio of valuation reserves (for Loans and ROPOA) to NPAs. 9/ Distressed Assets Ratio refers to the ratio of Distressed Assets to TLP plus ROPOA. p/ Preliminary … Less than P0.05 billion
Source: Supervisory Data Center, Supervision and Examination Sector
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
Table 35. Non-Banks with Quasi-Banking Functions (NBQBs): Financial Highlights
Levels (P Billion) 2000 2001 2002 2003 2004 Income Statement Total Operating Income 3.8 3.1 2.5 2.0 2.3 Net Interest Income 2.2 1.6 1.1 0.8 1.0 Non-interest Income 1.7 1.5 1.3 1.2 1.3 Operating Expenses 3.5 1.6 1.2 1.1 1.0 Bad Debts/Provisions for Probable Losses 0.7 0.1 0.1 . . . 0.1 Other Operating Expenses 2.7 1.4 1.1 1.1 0.9 Net Operating Income 0.4 1.6 1.3 0.9 1.3 Extraordinary Credits/(Charges) 1.1 0.4 0.2 0.6 0.4 Net Income Before Tax 1.4 2.0 1.5 1.4 1.7 Provisions for Income Tax 0.3 0.4 0.3 0.1 0.5 Net Income After Tax (NIAT) 1.2 1.5 1.2 1.3 1.2 Balance Sheet Total Assets 34.9 38.3 29.3 28.7 33.5 Cash and Due from Banks 2.0 1.4 1.0 1.9 1.5 Interbank Loans Receivable (IBL) 0.7 2.3 1.5 1.6 1.1 Loans, gross (exclusive of IBL) 11.2 14.4 8.3 12.7 12.4 Allowance for Probable Losses 0.8 1.2 0.9 1.0 0.7 Loans, net (exclusive of IBL) 10.4 13.2 7.4 11.7 11.7 Investments, net 7.7 8.9 9.5 7.6 13.5 ROPOA, net 2.6 2.9 1.8 1.3 1.4 Other Assets 11.4 9.7 8.1 4.6 4.4 Total Liabilities 19.0 22.5 13.4 12.2 17.3 Bills Payable 13.5 15.1 8.4 10.4 15.1 Other Liabilities 5.4 7.4 5.1 1.8 2.2 Total Capital Accounts 15.9 15.9 15.9 16.6 16.2 . . . Less than P50 million
Source: Supervisory Data Center, Supervision and Examination Sector
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
Table 36. Non-Banks with Quasi-Banking Functions (NBQBs) Selected Performance Indicators
Growth Rates 2000 2001 2002 2003 2004
Income Statement Total Operating Income 39.1 % (18.3 %) (21.4 %) (19.3 %) 17.6 % Net Interest Income 67.8 % (26.2 %) (28.5 %) (29.0 %) 24.4 % Non-interest Income 13.9 % (8.0 %) (14.1 %) (10.9 %) 13.0 % Operating Expenses 138.5 % (54.7 %) (25.9 %) (5.2 %) (9.2 %) Bad Debts/Provisions for Probable Losses 91.2 % (81.9 %) (52.4 %) (63.8 %) 199.8 % Other Operating Expenses 156.0 % (47.2 %) (23.4 %) (1.8 %) (13.7 %) Net Operating Income (71.4 %) 319.6 % (16.9 %) (31.9 %) 50.9 % Extraordinary Credits/(Charges) 555.2 % (63.7 %) (55.8 %) 226.0 % (34.2 %) Net Income Before Tax (1.8 %) 35.4 % (24.6 %) (1.8 %) 18.0 % Provisions for Income Tax 6.4 % 61.4 % (29.9 %) (52.2 %) 233.5 % Net Income After Tax (NIAT) (3.5 %) 29.4 % (23.1 %) 11.5 % (6.3 %) Balance Sheet Total Assets (14.5 %) 9.9 % (23.5 %) (2.0 %) 16.5 % Cash and due from Banks (72.9 %) (31.9 %) (30.5 %) 96.1 % (20.6 %) Interbank Loans Receivable (IBL) 29.6 % 218.4 % (32.8 %) 0.1 % (32.2 %) Loans, gross (exclusive of IBL) 10.8 % 28.5 % (42.2 %) 52.6 % (2.6 %) Allowance for Probable Losses 35.8 % 59.6 % (25.8 %) 7.2 % (30.0 %) Loans, net (exclusive of IBL) 9.4 % 26.3 % (43.7 %) 58.0 % (0.3 %) Investments, net (51.4 %) 16.0 % 6.5 % (20.2 %) 77.7 % ROPOA, net 402.3 % 9.4 % (39.0 %) (24.5 %) 2.6 % Other Assets 64.7 % (15.0 %) (16.0 %) (42.8 %) (5.3 %) Total Liabilities (28.6 %) 18.3 % (40.2 %) (9.5 %) 42.0 % Bills Payable 1.3 % 11.2 % (44.4 %) 24.1 % 45.0 % Other Liabilities (58.8 %) 35.8 % (31.5 %) (64.9 %) 24.6 % Total Capital Accounts 11.7 % (0.1 %) (0.0 %) 4.3 % (2.2 %) Selected Ratios Profitability Cost-to-Income 1/ 70.7 % 45.7 % 44.6 % 54.2 % 39.8 % Return on Assets (ROA) 3.1 % 4.1 % 3.5 % 4.5 % 3.9 % Return on Equity (ROE) 7.8 % 9.5 % 7.3 % 8.0 % 7.4 % Liquidity Cash and Due from Banks to Bills Payable 15.0 % 9.2 % 11.5 % 18.1 % 9.9 % Liquid Assets to Bills Payable 2/ 32.5 % 42.0 % 70.6 % 52.1 % 76.8 % Loans, gross to Bills Payable 88.0 % 110.8 % 117.9 % 137.2 % 89.1 % Asset Quality Non-performing Loans (NPL) 8.7 % 9.8 % 10.5 % 5.8 % 4.0 % NPL Coverage 72.2 % 72.9 % 85.7 % 114.6 % 124.8 % Non-performing Assets (NPA) to Gross Assets 10.9 % 12.2 % 10.9 % 7.6 % 5.5 % NPA Coverage 24.6 % 31.3 % 43.1 % 53.6 % 46.0 % Capital Adequacy Total Capital Accounts to Total Assets 45.6 % 41.4 % 54.2 % 57.7 % 48.4 % Paid-in Capital to Total Capital Accounts 32.1 % 34.0 % 33.6 % 52.0 % 55.1 % Business Mix Total Investments (gross) to Total Assets 22.3 % 23.6 % 33.2 % 27.5 % 40.5 % Total Loans (gross) to Total Assets 34.2 % 43.5 % 33.7 % 49.6 % 40.1 % 1/ Cost-to-Income Ratio refers to operating expenses, exclusive of bad debts and provisions to total operating income 2/ Liquid Assets refers to Cash and Due from Banks plus Investments,net (less equity investments,net)
Source: Supervisory Data Center, Supervision and Examination Sector
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
Table 37. Non-Banks with Quasi-Banking Functions (NBQBs): Profitability Indicators
Levels (P Billion) 2000 2001 2002 2003 2004
Total Operating Income 3.8 3.1 2.5 2.0 2.3 Net Interest Income 2.2 1.6 1.1 0.8 1.0 Interest Income 2.4 1.1 1.1 0.9 1.2 Interest Expenses 1.6 1.4 0.8 0.6 0.8 Non-interest Income 1.7 1.5 1.3 1.2 1.3 Fee-based Income 0.8 0.7 0.7 0.5 0.7 Trading Income 0.5 0.1 0.2 0.4 0.6 Other Income 0.3 0.7 0.5 0.2 0.1 Operating Expenses 3.5 1.6 1.2 1.1 1.0 Bad Debts/Provisions for Probable Losses 0.8 0.1 0.1 . . . 0.1 Other Operating Expenses 2.7 1.4 1.1 1.1 0.9 Net Operating Income 0.4 1.6 1.3 0.9 1.3 Extraordinary Credits/(Charges) 1.1 0.4 0.2 0.6 0.4 Net Income Before Tax 1.4 2.0 1.5 1.4 1.7 Provisions for Income Tax 0.3 0.4 0.3 0.1 0.5 Net Income After Tax (NIAT) 1.2 1.5 1.2 1.3 1.2 Growth Rates Total Operating Income 39.1 % (18.3 %) (21.4 %) (19.3 %) 17.6 % Net Interest Income 67.8 % (26.2 %) (28.5 %) (29.0 %) 24.4 % Interest Income 17.3 % (54.6 %) 1.7 % (17.3 %) 31.8 % Interest Expenses 124.5 % (13.7 %) (42.8 %) (27.9 %) 31.5 % Non-interest Income 13.9 % (8.0 %) (14.1 %) (10.9 %) 13.0 % Fee-based Income 88.0 % (13.1 %) (9.7 %) (17.3 %) 24.9 % Trading Income (46.9 %) (79.2 %) 43.7 % 177.7 % 36.2 % Other Income 364.8 % 112.8 % (27.1 %) (58.0 %) (61.4 %) Operating Expenses 138.5 % (54.7 %) (25.9 %) (5.2 %) (9.2 %) Bad Debts/Provisions for Probable Losses 91.2 % (81.9 %) (52.4 %) (63.8 %) 199.8 % Other Operating Expenses 156.0 % (47.2 %) (23.4 %) (1.8 %) (13.7 %) Net Operating Income (71.4 %) 319.6 % (16.9 %) (31.9 %) 50.9 % Extraordinary Credits/(Charges) 555.2 % (63.7 %) (55.8 %) 226.0 % (34.2 %) Net Income Before Tax (1.8 %) 35.4 % (24.6 %) (1.8 %) 18.0 % Provisions for Income Tax 6.4 % 61.4 % (29.9 %) (52.2 %) 233.5 % Net Income After Tax (NIAT) (3.5 %) 29.4 % (23.1 %) 11.5 % (6.3 %) Selected Ratios 1/ Earning Asset Yield 28.4 % 18.1 % 10.7 % 8.5 % 10.6 % 2/ Funding Cost 12.1 % 9.8 % 6.9 % 6.2 % 6.0 % 3/ Interest Spread 16.3 % 8.3 % 3.8 % 2.3 % 4.6 % Net Interest Margin4/ 16.2 % 9.6 % 6.2 % 5.0 % 6.0 % Non-interest Income to Total Operating Income 43.6 % 49.1 % 53.6 % 59.2 % 56.9 % 5/ Cost-to-Income 70.7 % 45.7 % 44.6 % 54.2 % 39.8 % Return on Assets (ROA)6/ 3.1 % 4.1 % 3.5 % 4.5 % 3.9 % Return on Equity (ROE) 6/ 7.8 % 9.5 % 7.3 % 8.0 % 7.4 %
1/ Earning Asset Yield refers to the ratio of interest income to average earning assets 2/ Funding Cost refers to the ratio of interest expenses to average interest-bearing liabilities 3/ Interest Spread refers to the difference between earning asset yield and funding cost 4/ Net Interest Margin refers to the ratio of net interest income to average earning assets 5/ Cost-to-Income Ratio refers to operating expenses, exclusive of bad debts and provisions to total operating income 6/ ROA and ROE refers to the ratio of annualized NIAT to average assets and capital, respectively. . . . Less than P50 million
Source: Supervisory Data Center, Supervision and Examination Sector
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
1/ Table 38. Non-Banks with Quasi-Banking Functions (NBQBs): Asset Quality Indicators
Major Accounts 2000 2001 2002 2003 2004
Levels (P Billion) Total Assets 34.9 38.3 29.3 28.7 33.5 Gross Assets 2/ 35.9 39.9 30.8 30.0 34.4 Total Loan Portfolio (TLP) 11.9 16.7 9.9 14.2 13.4 Interbank Loans Receivable (IBL) 0.7 2.3 1.5 1.6 1.1 Total Loan Portfolio (TLP), (exclusive of IBL) 11.2 14.4 8.3 12.7 12.4 Total Loan Portfolio (TLP), net (exclusive of IBL) 10.4 13.2 7.4 11.7 11.7 Non-performing Loans (NPL) 1.0 1.6 1.0 0.8 0.5 Loan Loss Reserves (LLR) 0.8 1.2 0.9 1.0 0.7 ROPOA, gross 3/ 2.9 3.2 2.3 1.6 1.6 Allowance for ROPOA 0.2 0.3 0.6 0.3 0.2 Restructured Loans (RL), gross 0.3 0.7 0.5 0.3 0.4 Restructured Loans (RL), current 0.3 0.4 0.4 0.2 0.2 Non-performing Assets (NPAs) 4/ 3.9 4.9 3.4 2.3 1.9 Allowance for Probable Losses on NPAs 1.0 1.5 1.5 1.2 0.9 Growth Rates Total Assets (14.5 %) 9.9 % (23.5 %) (2.0 %) 16.5 % Gross Assets 2/ (13.5 %) 11.2 % (22.8 %) (2.6 %) 14.7 % TLP 11.8 % 40.1 % (40.9 %) 44.3 % (5.8 %) IBL 29.6 % 218.4 % (32.8 %) 0.1 % (32.2 %) TLP (exclusive of IBL) 10.8 % 28.5 % (42.2 %) 52.6 % (2.6 %) TLP, net (exclusive of IBL) 9.4 % 26.3 % (43.7 %) 58.0 % (0.3 %) NPL (5.6 %) 57.9 % (36.8 %) (19.9 %) (35.7 %) LLR 35.8 % 59.6 % (25.8 %) 7.2 % (30.0 %) ROPOA, gross3 / 364.0 % 12.8 % (27.7 %) (31.3 %) (1.7 %) Allowance for ROPOA 135.4 % 55.6 % 74.4 % (52.5 %) (23.5 %) RL, gross 35.4 % 110.0 % (22.1 %) (34.3 %) 7.9 % RL, current 182.4 % 69.8 % (9.2 %) (58.3 %) 41.6 % NPAs4 / 126.8 % 24.8 % (30.8 %) (32.3 %) (16.8 %) Allowance for Probable Losses on NPAs 49.5 % 58.7 % (4.5 %) (16.0 %) (28.5 %) Selected Ratios
RL to TLP 2.6 % 3.9 % 5.1 % 2.3 % 2.7 % LLR to TLP 6.3 % 7.2 % 9.0 % 6.7 % 5.0 % NPL Ratio (inclusive of IBL) 8.7 % 9.8 % 10.5 % 5.8 % 4.0 % NPL Ratio (exclusive of IBL) 9.3 % 11.4 % 12.5 % 6.5 % 4.3 % 5/ NPL Coverage 72.2 % 72.9 % 85.7 % 114.6 % 124.8 % NPA to Gross Assets 10.9 % 12.2 % 10.9 % 7.6 % 5.5 % NPA Coverage6/ 24.6 % 31.3 % 43.1 % 53.6 % 46.0 % 1/ Asset Quality Indicators defined per BSP Circular No. 202 dated 27 May 1999 amended by BSP Circular No. 351 dated 19 September 2002 2/ Gross Assets refers to Total Assets, net of reserves plus Loan Loss Reserves (LLR) plus provision for ROPOA 3/ ROPOA refers to Real and Other Properties Owned or Acquired 4/ NPA refers to NPLs plus ROPOA, gross excluding performing sales contracts receivable per BSP Circular No. 380 dated 28 March 2003 5/ NPL Coverage refers to the ratio of LLR to NPL 6/ NPA Coverage refers to the ratio of valuation reserves (for Loans and ROPOA) to NPAs
Source: Supervisory Data Center, Supervision and Examination Sector
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
Table 39. Non-Stock Savings and Loan Associations (NSSLAs) Selected Performance Indicators
Levels (P Billion) 2000 2001 2002 2003 2004 Balance Sheet Total Assets 40.4 47.9 54.4 61.4 66.9 Cash and Due from Banks 3.0 3.4 3.4 5.1 5.4 Loans, gross 34.3 39.5 46.1 52.1 59.4 Allowance for Probable Losses 1.6 1.6 2.4 4.0 6.1 Loans, net 32.7 37.8 43.7 48.1 53.2 Investments, net 1.9 3.1 3.9 5.2 4.3 ROPOA, net 0.5 0.2 0.3 0.5 0.3 Other Assets 2.3 3.4 3.1 2.6 3.7 Total Liabilities 6.3 6.6 6.6 6.8 7.9 Deposits 2.1 3.5 3.7 3.9 4.8 Bills Payable 0.8 0.4 0.4 0.4 0.4 Other Liabilities 3.5 2.7 2.5 2.4 2.7 Total Capital Accounts 34.1 41.3 47.8 54.6 59.0 Growth Rates Balance Sheet Total Assets 26.6 % 18.6 % 13.6 % 12.8 % 9.0 % Cash and Due from Banks (6.8 %) 11.4 % 0.7 % 48.4 % 7.7 % Loans, gross 27.0 % 15.2 % 16.8 % 13.0 % 14.0 % Allowance for Probable Losses 45.8 % 2.0 % 46.3 % 68.2 % 53.0 % Loans, net 26.2 % 15.8 % 15.6 % 10.0 % 10.8 % Investments, net 195.7 % 58.8 % 26.4 % 32.6 % (17.4 %) ROPOA, net (7.5 %) (53.7 %) 34.9 % 64.7 % (43.8 %) Other Assets 42.0 % 49.3 % (8.6 %) (16.7 %) 42.5 % Total Liabilities 57.4 % 5.0 % (0.2 %) 2.6 % 16.9 % Deposits 34.2 % 70.5 % 4.7 % 6.5 % 22.3 % Bills Payable 7,240.2 % (53.1 %) 0.5 % 7.9 % 9.5 % Other Liabilities 41.4 % (21.3 %) (6.6 %) (3.8 %) 9.5 % Total Capital Accounts 22.2 % 21.1 % 15.8 % 14.2 % 8.0 % Selected Ratios Liquidity Cash and Due from Banks to Deposits 146.8 % 95.9 % 92.2 % 128.5 % 113.2 % Liquid Assets to Deposits1/ 241.0 % 183.6 % 198.2 % 260.5 % 202.3 % Loans, gross to Deposits 1,656.5 % 1,118.9 % 1,249.0 % 1,325.2 % 1,235.6 % Asset Quality Non-performing Loans (NPL) 6.3 % 6.4 % 6.1 % 16.7 % 15.3 % NPL Coverage 74.6 % 64.4 % 84.9 % 46.0 % 67.6 % Non-performing Assets (NPA) to Gross Assets 6.3 % 5.6 % 5.5 % 14.1 % 12.8 % NPA Coverage 60.9 % 59.1 % 76.6 % 43.5 % 65.6 % Capital Adequacy Total Capital Accounts to Total Assets 84.4 % 86.2 % 87.9 % 89.0 % 88.2 % Paid-in Capital to Total Capital Accounts 92.7 % 91.5 % 89.5 % 90.6 % 91.3 % Business Mix Total Investments (gross) to Total Assets 4.8% 6.5% 7.2% 8.4% 6.4% Total Loans (gross) to Total Assets 84.8 % 82.4 % 84.7 % 84.9 % 88.8 %
1/ Liquid Assets refers to Cash and Due from Banks plus Investments,net (less equity investments,net)
Source: Supervisory Data Center, Supervision and Examination Sector
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
Table 40. Non-Stock Savings and Loan Associations (NSSLAs): Asset Quality Indicators 1/
Major Accounts 2000 2001 2002 2003 2004
Levels (P Billion) Total Assets 40.4 47.9 54.4 61.4 66.9 2/ Gross Assets 42.0 49.5 56.8 65.4 73.0 Total Loan Portfolio (TLP) 34.3 39.5 46.1 52.1 59.4 Total Loan Portfolio (TLP), (exclusive of IBL) 34.3 39.5 46.1 52.1 59.4 Total Loan Portfolio (TLP), net (exclusive of IBL) 32.7 37.8 43.7 48.1 53.2 Non-performing Loans (NPL) 2.1 2.5 2.8 8.7 9.1 Loan Loss Reserves (LLR) 1.6 1.6 2.4 4.0 6.1 ROPOA, gross3/ 0.5 0.2 0.3 0.5 0.3 4/ Non-performing Assets (NPAs) 2.6 2.8 3.1 9.2 9.4 Allowance for Probable Losses on NPAs 1.6 1.6 2.4 4.0 6.1 Growth Rates Total Assets 26.6% 18.6% 13.6% 12.8% 9.0% 2/ Gross Assets 27.2% 18.0% 14.7% 15.1% 11.7% TLP 27.0% 15.2% 16.8% 13.0% 14.0% TLP (exclusive of IBL) 27.0% 15.2% 16.8% 13.0% 14.0% TLP, net (exclusive of IBL) 26.2% 15.8% 15.6% 10.0% 10.8% NPL 36.2% 18.2% 11.0% 210.2% 4.2% LLR 45.8% 2.0% 46.3% 68.2% 53.0% ROPOA, gross3 / (7.5 %) (53.7 %) 34.9% 64.7% (43.8 %) 4/ NPAs 25.3% 5.0% 12.9% 196.0% 1.6% Allowance for Probable Losses on NPAs 45.8% 2.0% 46.3% 68.2% 53.0% Selected Ratios RL to TLP 0.0 0.0 0.0 0.0 0.0 LLR to TLP 4.7 % 4.1 % 5.2 % 7.7 % 10.3 % NPL Ratio (inclusive of IBL) 6.3 % 6.4 % 6.1 % 16.7 % 15.3 % NPL Ratio (exclusive of IBL) 6.3 % 6.4 % 6.1 % 16.7 % 15.3 % 5/ NPL Coverage 74.6 % 64.4 % 84.9 % 46.0 % 67.6 % NPA to Gross Assets 6.3 % 5.6 % 5.5 % 14.1 % 12.8 % NPA Coverage6/ 60.9 % 59.2 % 76.6 % 43.5 % 65.6 %
1/ Asset Quality Indicators defined per BSP Circular No. 202 dated 27 May 1999 amended by BSP Circular No. 351 dated 19 September 2002 2/ Gross Assets refers to Total Assets, net of reserves plus Loan Loss Reserves (LLR) plus provision for ROPOA 3/ ROPOA refers to Real and Other Properties Owned or Acquired 4/ NPA refers to NPLs plus ROPOA, gross 5/ NPL Coverage refers to the ratio of LLR to NPL 6/ NPA Coverage refers to the ratio of LLR (for Loans and ROPOA) to NPAs
Source: Supervisory Data Center, Supervision and Examination Sector
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
Table 41. Offshore Banking System Financial Highlights
Levels ($ Million) 2000 2001 2002 2003 2004
Income Statement Total Operating Income 44 23 20 19 19 Net Interest Income 26 24 21 8 9 Non-interest Income 18 (1) (1) 11 10 Operating Expenses 47 26 16 12 14 Provisions for Probable Losses 198311 Other Operating Expenses 28 18 13 11 13 Net Operating Income (3) (3) 4 7 5 Net Income Before Tax (3) (3) 3 7 5 Provision for Income Tax 00 010 Net Income After Tax (NIAT) (3) (3) 3 6 5
Balance Sheet Total Assets (net) 1124 761 577 604 805 Allowance for Probable Losses 34 96 86 85 77 Gross Assets 1158 857 663 689 882 Due from Other Banks 362 181 163 171 131 Loans, gross 553 443 332 282 256 Investment in Bonds and Other Securities 181 211 148 215 474 Other Assets 62 22 20 21 21 Total Liabilities 1124 761 577 604 805 Deposits of Non-residents Other than Banks 36 38 29 26 22 Due to Other Banks 259 183 212 193 210 Other Liabilities 59 7 16 15 23 Net Due to Head Office/Other Branches 770 533 320 370 550
Source: Supervisory Data Center, Supervision and Examination Sector
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
Table 42. Offshore Banking System Selected Performance Indicators
Growth Rates 2000 2001 2002 2003 2004
Income Statement Total Operating Income 37.5% (47.7 %) (13.0 %) (5.0 %) 0.0% Net Interest Income 36.8% (7.7 %) (12.5 %) (61.9 %) 12.5 % Non-interest Income 38.5% (105.6 %) 0.0% 1,200.0 % (9.1 %) Operating Expenses (20.3 %) (44.7 %) (38.5 %) (25.0 %) 16.7 % Provisions for Probable Losses (44.1 %) (57.9 %) (62.5 %) (66.7 %) 0.0% Other Operating Expenses 12.0% (35.7 %) (27.8 %) (15.4 %) 18.2 % Net Operating Income 88.9 % 0.0% 233.3 % 75.0 % (28.6 %) Net Income Before Tax 88.9 % 0.0% 200.0 % 133.3 % (28.6 %) Provision for Income Tax - - - 0.0% (100.0 %) Net Income After Tax (NIAT) 88.9 % 0.0% 200.0 % 100.0 % (16.7 %)
Balance Sheet Total Assets (net) (14.7 %) (32.3 %) (24.2 %) 4.7 % 33.3 % Allowance for Probable Losses (61.4 %) 182.4 % (10.4 %) (1.2 %) (9.4 %) Gross Assets (17.6 %) (26.0 %) (22.6 %) 3.9 % 28.0 % Due from Other Banks (15.4 %) (50.0 %) (9.9 %) 4.9 % (23.4 %) Loans, gross (35.4 %) (19.9 %) (25.1 %) (15.1 %) (9.2 %) Investment in Bonds and Other Securities 123.5% 16.6 % (29.9 %) 45.3 % 120.5 % Other Assets 55.0% (64.5 %) (9.1 %) 5.0 % 0.0% Total Liabilities (14.7 %) (32.3 %) (24.2 %) 4.7 % 33.3 % Deposits of Non-residents Other than Banks 12.5% 5.6 % (23.7 %) (10.3 %) (15.4 %) Due to Other Banks 28.2% (29.3 %) 15.8 % (9.0 %) 8.8 % Other Liabilities 34.1% (88.1 %) 128.6 % (6.3 %) 53.3 % Net Due to Head Office/Other Branches (25.9 %) (30.8 %) (40.0 %) 15.6 % 48.6 % Selected Ratios Profitability Cost-to-Income Ratio 63.6 % 78.3 % 65.0 % 57.9 % 68.4 % Return on Assets (ROA) (0.3 %) (0.3 %) 0.5% 1.0% 0.7%
Source: Supervisory Data Center, Supervision and Examination Sector
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
Table 43. Total Trust Operations (Philippine Banks & NBFIs): Financial Highlights
Levels (P Billion) 2000 2001 2002 2003 2004
INCOME AND EXPENSE Total Trust Income 2.6 2.7 3.5 4.7 4.9 * Fees and Commissions 2.6 2.6 3.5 4.7 4.9 Other Income ...... 0.1 ...... Total Trust Expenses 1.1 1.0 1.1 1.6 1.3 Compensation / Fringe Benefits 0.4 0.4 0.5 0.6 0.5 Depreciation / Amortization 0.1 0.1 0.1 0.1 0.1 Management and Professional Fees ...... Taxes and Licenses 0.1 0.1 0.1 0.1 0.2 Other Expenses 0.4 0.4 0.5 0.8 0.5 Operating Income / (Loss) 1.6 1.7 2.4 3.1 3.6
ASSETS AND ACCOUNTABILITIES Total Trust Assets 491.3 470.0 596.8 707.0 812.8 Cash and Due from Banks 33.4 72.1 114.0 84.0 105.1 Loans and Discounts (net) 80.6 69.4 61.5 62.8 63.2 Investments in: 259.3 304.1 396.0 524.9 592.3 Government Securities (net) 136.4 154.2 257.1 342.0 423.7 Private Instruments and Shares of Stocks (net) 97.4 123.1 103.5 140.5 118.5 CTFs / UITFs 14.4 15.6 24.2 29.6 37.2 Real Estate (net) 11.2 11.3 11.0 12.6 12.8 Asset-Backed Securities 0.2 0.2 . . . Real & Other Properties Acquired in Settlement of Loans (net) 0.8 0.8 0.7 0.9 0.7 Other Assets 117.2 23.5 24.7 34.4 51.6 Total Trust Accountabilities 491.3 470.0 596.8 707.0 812.8 Trust and Other Fiduciary Accounts 289.5 229.4 254.5 343.9 394.0 Administratorship 22.7 21.7 22.2 25.2 27.5 Employees Benefit Plans Under Trust 49.8 55.9 57.5 73.1 84.3 Escrow 39.3 40.5 46.3 51.3 16.1 Personal Trust 58.6 50.3 51.2 95.7 117.4 Pre-need Plans 32.4 41.4 48.0 61.6 73.5 Other Institutional Trust 2.1 10.4 21.4 Others 86.7 19.7 27.1 26.5 53.8 Common Trust Funds / Unit Investment Trust Funds 67.9 82.2 122.6 249.4 296.8 Investment Management Accounts 75.7 87.0 94.9 102.1 111.2 Other Accountabilities / Unearned Income 58.3 71.4 124.9 11.7 10.9
. . . Less than P0.05 billion * Differs from CSIE-Trust Department Income due to reporting inconsistencies; MAB dated 23 February 2005 issued to correct.
Source: Supervisory Data Center, Supervision and Examination Sector
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
Table 44. Total Trust (Philippine Banks and NBFIs) : Selected Performance Indicators
Growth Rates 2001 2002 2003 2004 INCOME AND EXPENSE Total Trust Income 1.1 % 32.7 % 33.3 % 3.8 % Fees and Commissions 0.8 % 33.1 % 33.8 % 4.5 % Other Income 18.4 % 11.1 % (4.0 %) (60.4 %) Total Trust Expenses (9.1 %) 16.0 % 41.5 % (19.2 %) Compensation / Fringe Benefits 7.2 % 3.1 % 21.9 % (5.9 %) Depreciation / Amortization (56.3 %) 15.4 % 6.7 % (12.5 %) Management and Professional Fees 48.0 % (13.5 %) 34.4 % (34.9 %) Taxes and Licenses (18.2 %) 15.3 % 19.3 % 88.9 % Other Expenses (13.3 %) 34.6 % 67.9 % (40.5 %) Operating Income / (Loss) 8.1 % 42.5 % 29.4 % 15.7 % ASSETS AND ACCOUNTABILITIES Total Trust Assets (4.3 %) 27.0 % 18.5 % 15.0 % Cash and Due from Banks 116.1 % 58.0 % (26.3 %) 25.1 % Loans and Discounts (net) (13.9 %) (11.4 %) 2.1 % 0.6 % Investments in: 17.3 % 30.2 % 32.6 % 12.8 % Government Securities (net) 13.0 % 66.8 % 33.0 % 23.9 % Private Instruments and Shares of Stocks (net) 26.4 % (15.9 %) 35.7 % (15.7 %) CTFs / UITFs 8.9 % 54.7 % 22.5 % 25.7 % Real Estate (net) 0.9 % (2.2 %) 14.6 % 1.7 % Asset-Backed Securities 17.5 % (97.2 %) Real & Other Properties Acquired in Settlement of 2.6 % (19.4 %) 35.8 % (22.3 %) Other Assets (80.0 %) 5.1 % 39.5 % 50.0 % Total Trust Accountabilities (4.3 %) 27.0 % 18.5 % 15.0 % Trust and Other Fiduciary Accounts (20.7 %) 10.9 % 35.1 % 14.6 % Administratorship (4.4 %) 2.4 % 13.7 % 9.0 % Employees Benefit Plans Under Trust 12.2 % 2.9 % 27.0 % 15.4 % Escrow 3.1 % 14.3 % 10.8 % (68.6 %) Personal Trust (14.2 %) 1.9 % 87.0 % 22.6 % Pre-need Plans 28.1 % 15.8 % 28.3 % 19.4 % Other Institutional Trust 388.1 % 105.0 % Others (77.3 %) 37.8 % (2.0 %) 102.8 % Common Trust Funds / Unit Investment Trust Funds 21.1 % 49.2 % 103.5 % 19.0 % Investment Management Accounts 15.0% 9.0% 7.6% 8.9% Other Accountabilities / Unearned Income 22.3 % 75.0 % (90.7 %) (6.8 %) Selected Ratios Profitability Cost-to-Income Ratio 36.7 % 32.1 % 34.1 % 26.5 % Return on Trust Assets 0.4% 0.5% 0.5% 0.5% Liquidity Cash and Due from Banks to Total Accountabilities 15.4 % 19.1 % 11.9 % 12.9 % Liquid Assets to Total Accountabilities 63.9 % 67.0 % 79.4 % 80.0 % Loans (gross) to Total Accountabilities 13.9% 9.3% 9.6% 8.4% Asset Quality Non-performing Loans (NPL) Ratio n.a. n.a. 6.1 % 5.1 % NPL Coverage Ratio n.a. n.a. 118.3 % 140.9 % Non-performing Assets (NPA) to Gross Assets 0.2% 0.2% 0.8% 0.6% NPA Coverage Ratio 522.1 % 496.2 % 97.1 % 115.0 % n.a. Data not available
Source: Supervisory Data Center, Supervision and Examination Sector
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
Table 45. Total Trust Operations (Philippine Banks & NBFIs): Balance Sheet Structure
Major Accounts 2000 2001 2002 2003 2004
Total Trust Assets
Total Trust Assets 100.0% 100.0% 100.0% 100.0% 100.0% Cash and Due from Banks 6.8% 15.4% 19.1% 11.9% 12.9% Loans and Discounts (net) 16.4% 14.8% 10.3% 8.9% 7.8% Investments in: 52.8% 64.7% 66.4% 74.2% 72.9% Government Securities (net) 27.8% 32.8% 43.1% 48.4% 52.1% Private Instruments and Shares of Stocks (net) 19.8% 26.2% 17.3% 19.9% 14.6% CTFs / UITFs 2.9% 3.3% 4.1% 4.2% 4.6% Real Estate (net) 2.3% 2.4% 1.8% 1.8% 1.6% Asset-Backed Securities ...... Real & Other Properties Acquired in Settlement of 0.2% 0.2% 0.1% 0.1% 0.1% Loans (net) Other Assets 23.9% 5.0% 4.1% 4.8% 6.3%
Total Trust Accountabilities
Total Trust Accountabilities 100.0% 100.0% 100.0% 100.0% 100.0% Trust and Other Fiduciary Accounts 58.9% 48.8% 42.6% 48.6% 48.5% Administratorship 4.6% 4.6% 3.7% 3.6% 3.4% Employees Benefit Plans Under Trust 10.1% 11.9% 9.6% 10.3% 10.4% Escrow 8.0% 8.6% 7.8% 7.3% 2.0% Personal Trust 11.9% 10.7% 8.6% 13.5% 14.4% Pre-need Plans 6.6% 8.8% 8.0% 8.7% 9.0% Other Institutional Trust 0.4% 1.5% 2.6% Others 17.7% 4.2% 4.5% 3.8% 6.6%
Common Trust Funds / Unit Investment Trust 13.8% 17.5% 20.5% 35.3% 36.5% Funds Investment Management Accounts 15.4% 18.5% 15.9% 14.4% 13.7% Other Accountabilities / Unearned Income 11.9% 15.2% 20.9% 1.6% 1.4%
. . . Less than 0.05 percent
Source: Supervisory Data Center, Supervision and Examination Sector
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
LIST OF SCHEDULES
SCHEDULE 1 PHYSICAL COMPOSITION FINANCIAL INSTITUTIONS UNDER BSP SUPERVISION/REGULATION AS OF SEMESTERS-ENDED INDICATED
SCHEDULE 2 COMPARATIVE STATEMENT OF CONDITION PHILIPPINE FINANCIAL INSTITUTIONS (BANKS AND NON-BANKS) AS OF SEMESTERS-ENDED INDICATED
SCHEDULE 2.A COMPARATIVE STATEMENT OF CONDITION PHILIPPINE BANKING SYSTEM AS OF SEMESTERS-ENDED INDICATED
SCHEDULE 2.B COMPARATIVE STATEMENT OF CONDITION UNIVERSAL & COMMERCIAL BANKING SYSTEM AS OF SEMESTERS-ENDED INDICATED
SCHEDULE 2.C COMPARATIVE STATEMENT OF CONDITION THRIFT BANKING SYSTEM AS OF SEMESTERS-ENDED INDICATED
SCHEDULE 2.D COMPARATIVE STATEMENT OF CONDITION RURAL & COOPERATIVE BANKING SYSTEM AS OF SEMESTERS-ENDED INDICATED
SCHEDULE 3 SELECTED CONTINGENT ACCOUNTS PHILIPPINE BANKING SYSTEM AS OF SEMESTERS-ENDED INDICATED
SCHEDULE 3.A SELECTED CONTINGENT ACCOUNTS UNIVERSAL & COMMERCIAL BANKING SYSTEM AS OF SEMESTERS-ENDED INDICATED
SCHEDULE 3.B SELECTED CONTINGENT ACCOUNTS THRIFT BANKING SYSTEM AS OF SEMESTERS-ENDED INDICATED
Source: Office of Supervisory Policy Development, Supervision and Examination Sector
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
SCHEDULE 4 TRUST & FUND MANAGEMENT OPERATIONS ASSETS AND ACCOUNTABILITIES PHILIPPINE BANKS & NON-BANKS FINANCIAL INSTITUTIONS (NBFIS) AS OF SEMESTERS-ENDED INDICATED
SCHEDULE 4.A TRUST & FUND MANAGEMENT OPERATIONS ASSETS AND ACCOUNTABILITIES PHILIPPINE BANKS & NON-BANKS FINANCIAL INSTITUTIONS (NBFIS) BY TRUST OPERATIONS AS OF SEMESTERS-ENDED INDICATED
SCHEDULE 4.B TRUST & FUND MANAGEMENT OPERATIONS ASSETS AND ACCOUNTABILITIES UNIVERSAL & COMMERCIAL BANKING SYSTEM AS OF SEMESTERS-ENDED INDICATED
SCHEDULE 4.C TRUST & FUND MANAGEMENT OPERATIONS ASSETS AND ACCOUNTABILITIES THRIFT BANKING SYSTEM AS OF SEMESTERS-ENDED INDICATED
SCHEDULE 4.D TRUST & FUND MANAGEMENT OPERATIONS ASSETS AND ACCOUNTABILITIES NON-BANK FINANCIAL INSTITUTIONS (NBFIS) AS OF SEMESTERS-ENDED INDICATED
SCHEDULE 4.E TRUST & FUND MANAGEMENT OPERATIONS INCOME AND EXPENSES PHILIPPINE BANKS & NON-BANKS FINANCIAL INSTITUTIONS (NBFIS) AS OF SEMESTERS-ENDED INDICATED
Source: Office of Supervisory Policy Development, Supervision and Examination Sector
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
SCHEDULE 5 COMPARATIVE STATEMENT OF INCOME & EXPENSES PHILIPPINE BANKS & NON-BANKS WITH QUASI-BANKING FUNCTIONS (NBQBS) FOR THE PERIOD-ENDED INDICATED
SCHEDULE 5.A COMPARATIVE STATEMENT OF INCOME & EXPENSES PHILIPPINE BANKING SYSTEM FOR THE PERIOD-ENDED INDICATED
SCHEDULE 5.B COMPARATIVE STATEMENT OF INCOME & EXPENSES UNIVERSAL & COMMERCIAL BANKING SYSTEM FOR THE PERIOD-ENDED INDICATED
SCHEDULE 5.C COMPARATIVE STATEMENT OF INCOME & EXPENSES THRIFT BANKING SYSTEM FOR THE PERIOD-ENDED INDICATED
SCHEDULE 5.D COMPARATIVE STATEMENT OF INCOME & EXPENSES RURAL & COOPERATIVE BANKING SYSTEM FOR THE PERIOD-ENDED INDICATED
Source: Office of Supervisory Policy Development, Supervision and Examination Sector
Schedule 1 PHYSICAL COMPOSITION Financial Institutions Under BSP Supervision/Regulation As of Semesters-Ended Indicated
DECEMBER 2003 JUNE 2004 DECEMBER 2004
TYPE OF FINANCIAL INSTITUTIONS (FIs) HEAD OTHER HEAD OTHER HEAD OTHER TOTAL TOTAL TOTAL OFFICE OFFICES OFFICE OFFICES OFFICE OFFICES
BSP SUPERVISED/REGULATED FIs 18,505 6,556 11,949 18,833 6,671 12,162 19,197 6,781 12,416
I. BANKS 7,494 899 6,595 7,570 896 6,674 7,612 893 6,719
A. Universal and Commercial Banks 4,296 42 4,254 4,338 42 4,296 4,329 42 4,287 Universal Banks 3,696 18 3,678 3,709 18 3,691 3,694 18 3,676 Private Domestic Banks 3,272 12 3,260 3,288 12 3,276 3,271 12 3,259 Government Banks 412 3 409 409 3 406 411 3 408 Branches of Foreign Banks 12 3 9 12 3 9 12 3 9
Commercial Banks 600 24 576 629 24 605 635 24 611 Private Domestic Banks 444 8 436 470 9 461 477 9 468 Subsidiaries of Foreign Banks 139 5 134 142 4 138 142 4 138 Branches of Foreign Banks 17 11 6 17 11 6 16 11 5
B. Thrift Banks 1,277 92 1,185 1,266 89 1,177 1,280 87 1,193 Financial Institution Linked Banks 504 17 487 502 17 485 582 18 564 Domestic Bank Controlled 480 14 466 478 14 464 558 15 543 Foreign Bank Controlled 19 2 17 19 2 17 19 2 17 NBFI Controlled 5 1 4 5 1 4 5 1 4
Non-Linked 773 75 698 764 72 692 698 69 629
C. Rural and Cooperative Banks 1,921 765 1,156 1,966 765 1,201 2,003 764 1,239 Rural Banks 1,806 717 1,089 1,850 717 1,133 1,885 716 1,169 Microfinance-oriented Rural Banks 12 4 8 12 4 8 12 4 8 Cooperative Banks 103 44 59 104 44 60 106 44 62
II. NON-BANK FINANCIAL INSTITUTIONS (NBFIs) 1/ 11,000 5,647 5,353 11,253 5,766 5,487 11,575 5,879 5,696
A. With Quasi-Banking Function 30 11 19 30 11 19 31 12 19 Investment Houses 16 6 10 16 6 10 16 6 10 Financing Companies 14 5 9 14 5 9 14 5 9 Other Non-Bank with QBF Function 1
B. Without Quasi-Banking Functions 10,970 5,636 5,334 11,223 5,755 5,468 11,544 5,867 5,677 Investment Houses 25 22 3 25 22 3 25 22 3 Financing Companies 42 28 14 41 27 14 47 28 19 Investment Companies 10 10 10 10 10 10 Securities Dealers/Brokers 18 18 19 19 20 20 Lending Investors 5 5 5 5 2 2 Pawnshops 10,735 5,451 5,284 10,986 5,572 5,414 11,307 5,689 5,618 Venture Capital Corporations 7 7 7 7 5 5 Government Non-Bank Financial Institutions 2 2 2 2 2 2 Non-Stock Savings & Loan Associations 118 85 33 122 85 37 120 83 37 Credit Card Companies 8 8 6 6 6 6
III. OFFSHORE BANKING UNITS (OBUs) 11 10 1 10 9 1 10 9 1
1/ Except for pawnshops, all NBFIs include only entities without quasi-banking functions but with trust or IMA license and/or are subsidiaries/affiliates of banks/quasi-banks pursuant to Section 130 of R.A. No. 7653.
Source : Supervisory Data Center, Supervision and Examination Sector Schedule 2 COMPARATIVE STATEMENT OF CONDITION PHILIPPINE FINANCIAL INSTITUTIONS (Banks and Non-banks) As of Semesters-Ended Indicated (Amounts in Billion Pesos)
ALL BANKS/NBFIs ALL BANKS 1 / NON-BANK FINANCIAL INSTITUTIONS (NBFIs) Selected Accounts p/ End-Dec'03 End-Jun'04r/ End-Dec'04 End-Dec'03 End-Jun'04r/ End-Dec'04 p/ End-Dec'03 End-Jun'04 End-Dec'04
ASSETS 3,805.933 4,009.148 4,172.358 3,661.136 3,874.034 4,023.303 144.797 135.114 149.055
Cash and Due from Banks 295.870 331.492 330.247 285.078 324.167 319.953 10.792 7.325 10.294 Loan Portfolio (net) 2/ 1,904.293 1,930.827 1,961.092 1,820.843 1,855.094 1,869.853 83.450 75.733 91.239 Investments (net) 1,022.027 1,152.926 1,278.661 990.506 1,118.642 1,249.009 31.521 34.284 29.652 ROPOA (net) 223.498 233.625 235.804 223.498 233.625 235.804 Other Assets 360.245 360.278 366.554 341.211 342.506 348.684 19.034 17.772 17.870
LIABILITIES AND CAPITAL 3,805.933 4,009.148 4,172.358 3,661.136 3,874.034 4,023.303 144.797 135.114 149.055
Liabilities 3,232.920 3,426.916 3,569.366 3,181.761 3,378.657 3,517.353 51.159 48.259 52.013
Deposit Liabilities 2,473.116 2,596.281 2,771.222 2,469.186 2,591.923 2,766.416 3.930 4.358 4.806 Peso Liabilities 1,713.870 1,765.218 1,883.412 1,709.940 1,760.860 1,878.606 3.930 4.358 4.806 Demand and NOW 300.399 316.153 332.866 300.399 316.153 332.866 Savings 1,249.993 1,208.709 1,244.783 1,246.351 1,204.732 1,240.398 3.642 3.977 4.385 Time 163.478 240.356 305.763 163.190 239.975 305.342 0.288 0.381 0.421 Foreign Currency 759.246 831.063 887.810 759.246 831.063 887.810 Bills Payable 408.115 485.294 419.503 381.017 461.647 386.540 27.098 23.647 32.963 Deposits Substitutes 13.129 8.741 13.643 8.227 3.971 2.293 4.902 4.770 11.350 Others 394.986 476.553 405.860 372.790 457.676 384.247 22.196 18.877 21.613
Special Financing 0.974 0.862 0.633 0.974 0.862 0.633 - - Time Certificates of Deposits - SF 0.391 0.388 0.396 0.391 0.388 0.396 Special Time Deposits 0.583 0.474 0.237 0.583 0.474 0.237 Unsecured Subordinated Debt 35.136 48.472 51.387 35.136 48.472 51.387 Other Liabilities 315.579 296.007 326.621 295.448 275.753 312.377 20.131 20.254 14.244
Capital Accounts 573.013 582.232 602.992 479.375 495.377 505.950 93.638 86.855 97.042
Capital Stock 303.795 303.638 316.128 219.234 224.481 226.788 84.561 79.157 89.340 Assigned Capital 12.785 15.765 15.989 12.785 15.765 15.989 Net Due to H.O. 47.277 59.232 56.580 47.277 59.232 56.580 Surplus, Surplus Reserves & Undivided Profits 209.156 203.597 214.295 200.079 195.899 206.593 9.077 7.698 7.702
1/ Total assets adjusted to net off the account "Due From Head Office" with "Due to Head Office" of branches of foreign banks 2/ Inclusive of Interbank Loans Receivable r/ Revised p/ Preliminary
Source : Supervisory Data Center, Supervision and Examination Sector Schedule 2.a COMPARATIVE STATEMENT OF CONDITION PHILIPPINE BANKING SYSTEM As of Semesters-Ended Indicated (Amounts in Billion Pesos)
ALL BANKS 1/ UNIVERSAL & COMMERCIAL BANKS 1 /2 / THRIFT BANKS RURAL AND COOPERATIVE BANKS Selected Accounts End-Dec'03 End-Jun'04r/ End-Dec'04p/ End-Dec'03 End-Jun'04 End-Dec'04 End-Dec'03 End-Jun'04r/ End-Dec'04 End-Dec'03 End-Jun'04r/ End-Dec'04 p/P
ASSETS 3,661.136 3,874.034 4,023.303 3,297.170 3,489.383 3,617.605 274.294 288.935 305.435 89.672 95.716 100.263
Cash and Due from Banks 285.078 324.167 319.953 243.566 280.583 274.535 23.738 24.113 27.242 17.774 19.471 18.176 Loan Portfolio (net) 3/ 1,820.843 1,855.094 1,869.853 1,616.517 1,647.128 1,647.117 151.071 152.960 162.380 53.255 55.006 60.356 Investments (net) 990.506 1,118.642 1,249.009 942.939 1,060.895 1,188.052 42.968 51.509 55.018 4.599 6.238 5.939 ROPOA (net) 223.498 233.625 235.804 188.309 192.920 194.926 27.976 32.982 32.985 7.213 7.723 7.893 Other Assets 341.211 342.506 348.684 305.839 307.857 312.975 28.541 27.371 27.810 6.831 7.278 7.899
LIABILITIES AND CAPITAL 3,661.136 3,874.034 4,023.303 3,297.170 3,489.383 3,617.605 274.294 288.935 305.435 89.672 95.716 100.263
Liabilities 3,181.761 3,378.657 3,517.353 2,873.401 3,049.477 3,167.136 233.055 248.477 265.759 75.305 80.703 84.458
Deposit Liabilities 2,469.186 2,591.923 2,766.416 2,209.834 2,315.116 2,472.346 197.193 208.562 223.728 62.159 68.245 70.342 Peso Liabilities 1,709.940 1,760.860 1,878.606 1,474.391 1,514.892 1,619.954 173.390 177.723 188.310 62.159 68.245 70.342 Demand and NOW 300.399 316.153 332.866 284.083 297.526 313.273 14.964 17.138 17.982 1.352 1.489 1.611 Savings 1,246.351 1,204.732 1,240.398 1,062.555 1,029.136 1,065.141 141.349 127.762 126.984 42.447 47.834 48.273 Time 163.190 239.975 305.342 127.753 188.230 241.540 17.077 32.823 43.344 18.360 18.922 20.458 Foreign Currency 759.246 831.063 887.810 735.443 800.224 852.392 23.803 30.839 35.418 - - - Bills Payable 381.017 461.647 386.540 350.832 427.819 352.177 22.234 26.672 25.938 7.951 7.156 8.425 Deposits Substitutes 8.227 3.971 2.293 7.890 3.779 1.907 0.337 0.192 0.386 - - - Others 372.790 457.676 384.247 342.942 424.040 350.270 21.897 26.480 25.552 7.951 7.156 8.425
Special Financing 0.974 0.862 0.633 0.529 0.414 0.180 0.277 0.276 0.275 0.168 0.172 0.178 Time Certificates of Deposits - SF 0.391 0.388 0.396 0.005 0.005 0.004 0.277 0.276 0.275 0.109 0.107 0.117 Special Time Deposits 0.583 0.474 0.237 0.524 0.409 0.176 - - - 0.059 0.065 0.061 Unsecured Subordinated Debt 35.136 48.472 51.387 35.136 48.472 51.387 ------Other Liabilities 295.448 275.753 312.377 277.070 257.656 291.046 13.351 12.967 15.818 5.027 5.130 5.513
Capital Accounts 479.375 495.377 505.950 423.769 439.906 450.469 41.239 40.458 39.676 14.367 15.013 15.805
Capital Stock 219.234 224.481 226.788 175.359 179.703 181.728 33.148 33.399 33.300 10.727 11.379 11.760 Assigned Capital 12.785 15.765 15.989 12.785 15.765 15.989 ------Net Due to H.O. 47.277 59.232 56.580 47.277 59.232 56.580 ------Surplus, Surplus Reserves & Undivided Profits 200.079 195.899 206.593 188.348 185.206 196.172 8.091 7.059 6.376 3.640 3.634 4.045
1/ Total assets adjusted to net off the account "Due From Head Office" with "Due to Head Office" of branches of foreign banks 2/ Inclusive of 3 branches of foreign banks with universal banking license, other foreign bank branches and subsidiaries, and 3 government banks: Development Bank of the Philippines (DBP), Land Bank of the Philippines (LBP), and Al Amanah Islamic Bank 3/ Inclusive of Interbank Loans Receivable r/ Revised p/ Preliminary
Source : Supervisory Data Center, Supervision and Examination Sector Schedule 2.b COMPARATIVE STATEMENT OF CONDITION UNIVERSAL AND COMMERCIAL BANKING SYSTEM As of Semesters-Ended Indicated (Amounts in Billion Pesos)
TOTALS UNIVERSAL BANKS1 /2 /1 COMMERCIAL BANKS /3/ Selected Accounts End-Dec'03 End-Jun'04 End-Dec'04 End-Dec'03 End-Jun'04 End-Dec'04 End-Dec'03 End-Jun'04 End-Dec'04
ASSETS 3,297.170 3,489.383 3,617.605 2,677.283 2,840.809 2,927.448 619.887 648.574 690.157
Cash and Due from Banks 243.566 280.583 274.535 186.238 231.724 207.458 57.328 48.859 67.077 Loan Portfolio (net) 4/ 1,616.517 1,647.128 1,647.117 1,290.096 1,314.245 1,333.397 326.421 332.883 313.720 Investments (net) 942.939 1,060.895 1,188.052 783.987 871.646 963.158 158.952 189.249 224.894 ROPOA (net) 188.309 192.920 194.926 162.607 166.656 167.661 25.702 26.264 27.265 Other Assets 305.839 307.857 312.975 254.355 256.538 255.774 51.484 51.319 57.201
LIABILITIES AND CAPITAL 3,297.170 3,489.383 3,617.605 2,677.283 2,840.809 2,927.448 619.887 648.574 690.157
Liabilities 2,873.401 3,049.477 3,167.136 2,346.851 2,508.092 2,586.055 526.550 541.385 581.081
Deposit Liabilities 2,209.834 2,315.116 2,472.346 1,824.326 1,915.261 2,037.500 385.508 399.855 434.846 Peso Liabilities 1,474.391 1,514.892 1,619.954 1,254.638 1,291.758 1,374.414 219.753 223.134 245.540 Demand and NOW 284.083 297.526 313.273 238.504 250.148 261.361 45.579 47.378 51.912 Savings 1,062.555 1,029.136 1,065.141 944.128 923.393 952.680 118.427 105.743 112.461 Time 127.753 188.230 241.540 72.006 118.217 160.373 55.747 70.013 81.167 Foreign Currency 735.443 800.224 852.392 569.688 623.503 663.086 165.755 176.721 189.306 Bills Payable 350.832 427.819 352.177 299.136 369.504 293.207 51.696 58.315 58.970 Deposits Substitutes 7.890 3.779 1.907 3.456 3.657 1.082 4.434 0.122 0.825 Others 342.942 424.040 350.270 295.680 365.847 292.125 47.262 58.193 58.145
Special Financing 0.529 0.414 0.180 0.528 0.413 0.179 0.001 0.001 0.001 Time Certificates of Deposits - SF 0.005 0.005 0.004 0.004 0.004 0.003 0.001 0.001 0.001 Special Time Deposits 0.524 0.409 0.176 0.524 0.409 0.176 - - - Unsecured Subordinated Debt 35.136 48.472 51.387 35.136 48.472 51.387 - - - Other Liabilities 277.070 257.656 291.046 187.725 174.442 203.782 89.345 83.214 87.264
Capital Accounts 423.769 439.906 450.469 330.432 332.717 341.393 93.337 107.189 109.076
Capital Stock 175.359 179.703 181.728 134.255 138.598 139.591 41.104 41.105 42.137 Assigned Capital 12.785 15.765 15.989 3.827 3.828 3.827 8.958 11.937 12.162 Net Due to H.O. 47.277 59.232 56.580 11.483 11.482 11.482 35.794 47.750 45.098 Surplus, Surplus Reserves & Undivided Profits 188.348 185.206 196.172 180.867 178.809 186.493 7.481 6.397 9.679
1/ Total assets adjusted to net off the account "Due From Head Office" with "Due to Head Office" of branches of foreign banks 2/ Inclusive of 3 branches of foreign banks with universal banking license and 3 government banks: Development Bank of the Philippines (DBP), Land Bank of the Philippines (LBP), and Al Amanah Islamic Bank 3/ Inclusive of the other foreign bank branches and subsidiaries 4/ Inclusive of Interbank Loans Receivable
Source : Supervisory Data Center, Supervision and Examination Sector Schedule 2.c COMPARATIVE STATEMENT OF CONDITION THRIFT BANKING SYSTEM As of Semesters-Ended Indicated (Amounts in Billion Pesos)
TOTALS FINANCIAL INSTITUTION LINKED BANKS NON-LINKED BANKS Selected Accounts End-Dec'03 End-Jun'04r/ End-Dec'04 End-Dec'03 End-Jun'04 End-Dec'04 End-Dec'03 End-Jun'04r/ End-Dec'04
ASSETS 274.294 288.935 305.435 145.850 157.484 201.332 128.444 131.451 104.103
Cash and Due from Banks 23.738 24.113 27.242 11.111 12.440 16.398 12.627 11.673 10.844 Loan Portfolio (net) 1/ 151.071 152.960 162.380 89.567 91.424 115.012 61.504 61.536 47.368 Investments (net) 42.968 51.509 55.018 27.077 32.874 41.117 15.891 18.635 13.901 ROPOA (net) 27.976 32.982 32.986 7.764 10.999 16.126 20.212 21.983 16.860 Other Assets 28.541 27.371 27.810 10.331 9.747 12.679 18.210 17.624 15.131
LIABILITIES AND CAPITAL 274.294 288.935 305.435 145.850 157.484 201.332 128.444 131.451 104.103
Liabilities 233.055 248.477 265.759 128.834 140.610 181.067 104.221 107.867 84.692
Deposit Liabilities 197.193 208.562 223.728 115.549 123.449 155.578 81.644 85.113 68.150 Peso Liabilities 173.390 177.723 188.310 98.767 100.887 126.321 74.623 76.836 61.989 Demand and NOW 14.964 17.138 17.982 8.893 10.705 13.304 6.071 6.433 4.678 Savings 141.349 127.762 126.984 80.872 66.455 78.086 60.477 61.307 48.898 Time 17.077 32.823 43.344 9.002 23.727 34.931 8.075 9.096 8.413 Foreign Currency 23.803 30.839 35.418 16.782 22.562 29.257 7.021 8.277 6.161 Bills Payable 22.234 26.672 25.938 7.413 11.559 17.052 14.821 15.113 8.886 Deposits Substitutes 0.337 0.192 0.386 - - - 0.337 0.192 0.386 Others 21.897 26.480 25.552 7.413 11.559 17.052 14.484 14.921 8.500
Special Financing 0.277 0.276 0.275 0.001 0.000 0.000 0.276 0.276 0.275 Time Certificates of Deposits - SF 0.277 0.276 0.275 0.001 0.000 0.000 0.276 0.276 0.275 Special Time Deposits ------Unsecured Subordinated Debt - - - - - Other Liabilities 13.351 12.967 15.818 5.871 5.602 8.437 7.480 7.365 7.381
Capital Accounts 41.239 40.458 39.676 17.016 16.874 20.265 24.223 23.584 19.411
Capital Stock 33.148 33.399 33.300 9.214 9.216 10.661 23.934 24.183 22.639 Assigned Capital - - - Net Due to H.O. - - - Surplus, Surplus Reserves & Undivided Profits 8.091 7.059 6.376 7.802 7.658 9.604 0.289 (0.599) (3.228)
r/ Revised 1/ Inclusive of Interbank Loans Receivable
Source : Supervisory Data Center, Supervision and Examination Sector Schedule 2.d COMPARATIVE STATEMENT OF CONDITION RURAL AND COOPERATIVE BANKING SYSTEM As of Semesters-Ended Indicated (Amounts in Billion Pesos) P
TOTALS RURAL BANKS COOPERATIVE BANKS Selected Accounts End-Dec'03 End-Jun'04r/ End-Dec'04p/ End-Dec'03 End-Jun'04r/p End-Dec'04/ End-Dec'03 End-Jun'04r/ End-Dec'04 p/
ASSETS 89.672 95.716 100.263 84.011 89.678 93.844 5.661 6.038 6.419
Cash and Due from Banks 17.774 19.471 18.176 16.939 18.525 17.236 0.835 0.946 0.940 Loan Portfolio (net) 53.255 55.006 60.356 49.300 50.827 55.821 3.955 4.179 4.535 Investments (net) 4.599 6.238 5.939 4.390 6.000 5.712 0.209 0.238 0.227 ROPOA (net) 7.213 7.723 7.893 6.972 7.479 7.620 0.241 0.244 0.273 Other Assets 6.831 7.278 7.899 6.410 6.847 7.455 0.421 0.431 0.444
LIABILITIES AND CAPITAL 89.672 95.716 100.263 84.011 89.678 93.844 5.661 6.038 6.419
Liabilities 75.305 80.703 84.458 70.602 75.692 79.136 4.703 5.011 5.322
Deposit Liabilities 62.159 68.245 70.342 58.880 64.630 66.617 3.279 3.615 3.725 Peso Liabilities 62.159 68.245 70.342 58.880 64.630 66.617 3.279 3.615 3.725 Demand and NOW 1.352 1.489 1.611 1.333 1.464 1.586 0.019 0.025 0.025 Savings 42.447 47.834 48.273 41.060 46.220 46.583 1.387 1.614 1.690 Time 18.360 18.922 20.458 16.487 16.946 18.448 1.873 1.976 2.010 Foreign Currency ------Bills Payable 7.951 7.156 8.425 6.870 6.102 7.172 1.081 1.054 1.253 Deposits Substitutes ------Others 7.951 7.156 8.425 6.870 6.102 7.172 1.081 1.054 1.253
Special Financing 0.168 0.172 0.178 0.127 0.132 0.137 0.041 0.040 0.041 Time Certificates of Deposits - SF 0.109 0.107 0.117 0.095 0.092 0.100 0.014 0.015 0.017 Special Time Deposits 0.059 0.065 0.061 0.032 0.040 0.037 0.027 0.025 0.024 Unsecured Subordinated Debt - - - - - Other Liabilities 5.027 5.130 5.513 4.725 4.828 5.210 0.302 0.302 0.303
Capital Accounts 14.367 15.013 15.805 13.409 13.986 14.708 0.958 1.027 1.097
Capital Stock 10.727 11.379 11.760 10.086 10.689 11.022 0.641 0.690 0.738 Assigned Capital ------Net Due to H.O. ------Surplus, Surplus Reserves & Undivided Profits 3.640 3.634 4.045 3.323 3.297 3.686 0.317 0.337 0.359 r/ Revised p/Preliminary
Source : Supervisory Data Center, Supervision and Examination Sector Schedule 3 SELECTED CONTINGENT ACCOUNTS PHILIPPINE BANKING SYSTEM As of Semesters-Ended Indicated (Amounts in Billion Pesos)
TOTAL UNIVERSAL and COMMERCIAL BANKS THRIFT BANKS Selected Accounts End-Dec '03End-Jun '04 End-Dec '04 End-Dec '03 End-Jun '04 End-Dec '04 End-Dec '03 End-Jun '04 End-Dec '04
TRADE-RELATED ACCOUNTS 44.403 48.830 45.419 44.403 48.830 45.419
Unused Imports Commercial LCs 39.102 43.459 39.922 39.102 43.459 39.922
Export LCs - Confirmed 5.301 5.371 5.497 5.301 5.371 5.497
BANK GUARANTEES 112.104 104.610 105.702 111.680 104.177 105.129 0.424 0.433 0.573
Stand-by Letters of Credit 45.771 46.253 46.071 45.347 45.820 45.498 0.424 0.433 0.573
Outstanding Guarantees Issued 66.333 58.357 59.631 66.333 58.357 59.631
DERIVATIVES INSTRUMENTS 1,207.770 1,055.905 1,012.185 1,207.770 1,055.905 1,012.185
Currency Forwards 756.522 799.530 764.469 756.522 799.530 764.469
Interest Rate Forwards - 12.920 2.253 - 12.920 2.253
Financial Options 321.526 24.294 19.762 321.526 24.294 19.762
Financial Futures - Trading - 15.842 28.171 - 15.842 28.171
Financial Futures - Hedging ------
Interest Rate Swaps 129.722 203.319 197.530 129.722 203.319 197.530
TRUST DEPARTMENT ACCOUNTS 700.000 722.706 805.595 680.739 699.785 780.621 19.261 22.921 24.974
Source : Supervisory Data Center, Supervision and Examination Sector Schedule 3.a SELECTED CONTINGENT ACCOUNTS UNIVERSAL AND COMMERCIAL BANKING SYSTEM As of Semesters-Ended Indicated (Amounts in Billion Pesos)
TOTAL UNIVERSAL BANKS COMMERCIAL BANKS Selected Accounts End-Dec '03End-Jun '04 End-Dec '04 End-Dec '03 End-Jun '04 End-Dec '04 End-Dec '03 End-Jun '04 End-Dec '04
TRADE-RELATED ACCOUNTS 44.403 48.830 45.419 38.208 41.496 38.926 6.195 7.334 6.493
Unused Imports Commercial LCs 39.102 43.459 39.922 33.014 36.432 33.557 6.088 7.027 6.365
Export LCs - Confirmed 5.301 5.371 5.497 5.194 5.064 5.369 0.107 0.307 0.128
BANK GUARANTEES 111.680 104.177 105.129 97.354 90.776 91.085 14.326 13.401 14.044
Stand-by Letters of Credit 45.347 45.820 45.498 34.328 34.707 34.948 11.019 11.113 10.550
Outstanding Guarantees Issued 66.333 58.357 59.631 63.026 56.069 56.137 3.307 2.288 3.494
DERIVATIVES INSTRUMENTS 1,207.770 1,055.905 1,012.185 637.521 687.081 652.899 570.249 368.824 359.286
Currency Forwards 756.522 799.530 764.469 554.552 530.012 520.261 201.970 269.518 244.208
Interest Rate Forwards - 12.920 2.253 - 12.920 2.253 - - -
Financial Options 321.526 24.294 19.762 0.930 1.061 1.447 320.596 23.233 18.315
Financial Futures - Trading - 15.842 28.171 - - - - 15.842 28.171
Financial Futures - Hedging ------
Interest Rate Swaps 129.722 203.319 197.530 82.039 143.088 128.938 47.683 60.231 68.592
TRUST DEPARTMENT ACCOUNTS 680.739 699.785 780.621 626.179 642.916 721.388 54.560 56.869 59.233
Source : Supervisory Data Center, Supervision and Examination Sector Schedule 3.b SELECTED CONTINGENT ACCOUNTS THRIFT BANKING SYSTEM As of Semesters-Ended Indicated (Amounts in Billion Pesos)
TOTAL FINANCIAL INSTITUTION LINKED BANKS NON-LINKED BANKS Selected Accounts End-Dec '03 End-Jun '04 End-Dec '04 End-Dec '03 End-Jun '04 End-Dec '04 End-Dec '03 End-Jun '04 End-Dec '04
TRADE-RELATED ACCOUNTS
Unused Imports Commercial LCs
Export LCs - Confirmed
BANK GUARANTEES 0.424 0.433 0.573 0.001 - 0.280 0.423 0.433 0.293
Stand-by Letters of Credit 0.424 0.433 0.573 0.001 0.280 0.423 0.433 0.293
Outstanding Guarantees Issued
DERIVATIVES INSTRUMENTS
Currency Forwards
Interest Rate Forwards
Financial Options
Financial Futures - Trading
Financial Futures - Hedging
Interest Rate Swaps
TRUST DEPARTMENT ACCOUNTS 19.261 22.921 24.974 4.355 4.847 4.510 14.906 18.074 20.463
1/ Revised
Source : Supervisory Data Center, Supervision and Examination Sector Schedule 4 TRUST AND FUND MANAGEMENT OPERATIONS - ASSETS AND ACCOUNTABILITIES PHILIPPINE BANKS and NON-BANK FINANCIAL INSTITUTIONS (NBFIs) As of Semesters-Ended Indicated (Amounts in Billion Pesos)
ALL BANKS/NBFIs UNIVERSAL AND COMMERCIAL BANKS THRIFT BANKS NBFIs Selected Accounts End-Dec '03 End-Jun '04 End-Dec '04 End-Dec '03 End-Jun '04 End-Dec '04 End-Dec '03End-Jun '04 End-Dec '04End-Dec '03End-Jun '04 End-Dec '04P / TOTAL ASSETS 707.005 729.449 812.831 680.739 699.785 780.676 19.261 22.921 24.974 7.005 6.743 7.181 Peso / Regular Assets 509.807 549.291 600.310 483.541 519.627 568.155 19.261 22.921 24.974 7.005 6.743 7.181 Cash and Due from Banks 46.448 48.718 61.363 44.293 46.462 58.106 1.722 1.939 2.929 0.433 0.317 0.328 Loans and Discounts (net) 60.768 68.020 59.831 57.734 65.143 57.044 0.907 0.720 0.669 2.127 2.157 2.118 Investments (net) 371.988 405.485 439.956 352.181 382.311 415.236 15.877 19.412 20.453 3.930 3.762 4.267 Real & Other Properties Acquired in Settlement of Loans (net) 0.907 1.011 0.716 0.872 0.976 0.681 0.013 0.013 0.013 0.022 0.022 0.022 Others 29.696 26.057 38.444 28.461 24.735 37.088 0.742 0.837 0.910 0.493 0.485 0.446 FCDU/EFCDU Assets 197.198 180.158 212.521 197.198 180.158 212.521 ------Cash and Due from Banks 37.541 34.435 43.734 37.541 34.435 43.734 ------Loans and Discounts (net) 1.987 1.634 3.326 1.987 1.634 3.326 ------Investments (net) 152.950 140.772 152.314 152.950 140.772 152.314 ------Real & Other Properties Acquired in Settlement of Loans (net) 0.014 0.009 - 0.014 0.009 ------Others 4.706 3.308 13.147 4.706 3.308 13.147 ------
TOTAL ACCOUNTABILITIES 707.005 729.449 812.831 680.739 699.785 780.676 19.261 22.921 24.974 7.005 6.743 7.181 Peso / Regular Accountabilities 503.554 544.841 594.988 477.539 515.435 563.169 19.042 22.687 24.663 6.973 6.719 7.156 Trust and Other Fiduciary Accounts 257.657 281.680 320.258 241.694 263.204 298.703 12.885 15.518 18.333 3.078 2.958 3.222 Administratorship 25.219 26.921 27.487 25.208 26.912 27.483 0.005 0.003 0.002 0.006 0.006 0.002 Employees Benefit Plans Under Trust 71.730 76.067 82.598 70.443 74.657 80.625 0.752 0.860 1.154 0.535 0.550 0.819 Escrow 9.112 8.766 8.905 8.050 8.411 8.633 1.058 0.351 0.268 0.004 0.004 0.004 Personal Trust 81.467 87.927 96.428 79.511 85.437 93.692 0.898 1.450 1.711 1.058 1.040 1.025 Pre-need Plans 54.431 59.779 61.332 43.342 46.177 45.341 10.010 12.688 15.171 1.079 0.914 0.820 Other Institutional Trust 5.189 13.348 14.026 4.927 13.104 13.703 - - - 0.262 0.244 0.323 Others 10.509 8.872 29.482 10.213 8.506 29.226 0.162 0.166 0.027 0.134 0.200 0.229 Common Trust Funds / Unit Investment Trust Funds 143.830 156.241 163.560 139.393 152.243 159.796 4.147 3.749 3.671 0.290 0.249 0.093 Investment Management Accounts 102.067 106.920 111.170 96.452 99.988 104.670 2.010 3.420 2.659 3.605 3.512 3.841 FCDU / EFCDU Accountabilities 191.802 174.702 206.990 191.802 174.702 206.990 ------Trust and Other Fiduciary Accounts 86.232 58.650 73.772 86.232 58.650 73.772 ------Administratorship 0.004 0.004 0.001 0.004 0.004 0.001 ------Employees Benefit Plans Under Trust 1.335 1.369 1.729 1.335 1.369 1.729 ------Escrow 42.222 7.041 7.219 42.222 7.041 7.219 ------Personal Trust 14.259 19.472 20.970 14.259 19.472 20.970 ------Pre-need Plans 7.139 8.373 12.166 7.139 8.373 12.166 ------Other Institutional Trust 5.242 6.336 7.354 5.242 6.336 7.354 ------Others 16.031 16.055 24.333 16.031 16.055 24.333 ------Common Trust Funds / Unit Investment Trust Fund 105.570 116.052 133.218 105.570 116.052 133.218 ------11.649 9.906 10.853 11.398 9.648 10.517 0.219 0.234 0.311 0.032 0.024 0.025 Other Accountabilities / Unearned Income
Source : Supervisory Data Center, Supervision and Examination Sector Schedule 4.a TRUST AND FUND MANAGEMENT OPERATIONS - ASSETS AND ACCOUNTABILITIES PHILIPPINE BANKS and NON-BANK FINANCIAL INSTITUTIONS (NBFIs) As of Semesters-Ended Indicated (Amounts in Billion Pesos)
TOTAL TRUST TOFA 1/ CTF / UITF 2/ IMA 3/ Selected Accounts End-Dec '03 End-Jun '04 End-Dec '04 End-Dec '03 End-Jun '04 End-Dec '04 End-Dec '03 End-Jun '04 End-Dec '04 End-Dec '03 End-Jun '04 End-Dec '04
TOTAL ASSETS 707.005 729.449 812.831 351.798 349.120 403.284 249.858 272.752 297.444 105.349 107.577 112.163
Peso / Regular Assets 509.807 549.291 600.310 260.359 285.218 324.193 144.099 156.496 164.014 105.349 107.577 112.163 Cash and Due from Banks 46.448 48.718 61.363 18.083 18.072 20.672 19.752 20.780 26.929 8.613 9.866 13.762 Loans and Discounts (net) 60.768 68.020 59.831 19.487 24.365 27.654 25.056 25.334 15.813 16.225 18.321 16.364 Investments (net) 371.988 405.485 439.956 199.280 222.141 243.451 96.553 107.407 117.991 76.155 75.937 78.514 Real & Other Properties Acquired in Settlement of Loans (net) 0.907 1.011 0.716 0.446 0.541 0.422 0.338 0.239 0.185 0.123 0.231 0.109 Others 29.696 26.057 38.444 23.063 20.099 31.934 2.400 2.736 3.096 4.233 3.222 3.414 FCDU/EFCDU Assets 197.198 180.158 212.521 91.439 63.902 79.091 105.759 116.256 133.430 - - - Cash and Due from Banks 37.541 34.435 43.734 10.741 8.998 9.599 26.800 25.437 34.135 - - - Loans and Discounts (net) 1.987 1.634 3.326 1.095 0.395 2.641 0.892 1.239 0.685 - - - Investments (net) 152.950 140.772 152.314 77.991 53.067 55.496 74.959 87.705 96.818 - - - Real & Other Properties Acquired in Settlement of Loans (net) 0.014 0.009 - - - - 0.014 0.009 - - - - Others 4.706 3.308 13.147 1.612 1.442 11.355 3.094 1.866 1.792 ------TOTAL ACCOUNTABILITIES 707.005 729.449 812.831 351.798 349.120 403.224 249.858 272.752 297.444 105.349 107.577 112.163
Peso / Regular Accountabilities 503.554 544.841 594.988 257.657 281.680 320.258 143.830 156.241 163.560 102.067 106.920 111.170 Trust and Other Fiduciary Accounts 257.657 281.680 320.258 257.657 281.680 320.258 ------Administratorship 25.219 26.921 27.487 25.219 26.921 27.487 ------Employees Benefit Plans Under Trust 71.730 76.067 82.598 71.730 76.067 82.598 ------Escrow 9.112 8.766 8.905 9.112 8.766 8.905 ------Personal Trust 81.467 87.927 96.428 81.467 87.927 96.428 ------Pre-need Plans 54.431 59.779 61.332 54.431 59.779 61.332 ------Other Institutional Trust 5.189 13.348 14.026 5.189 13.348 14.026 ------Others 10.509 8.872 29.482 10.509 8.872 29.482 ------Common Trust Funds / Unit Investment Trust Fund 143.830 156.241 163.560 - - - 143.830 156.241 163.560 - - - Investment Management Accounts 102.067 106.920 111.170 ------102.067 106.920 111.170 FCDU / EFCDU Accountabilities 191.802 174.702 206.990 86.232 58.650 73.772 105.570 116.052 133.218 - - - Trust and Other Fiduciary Accounts 86.232 58.650 73.772 86.232 58.650 73.772 ------Administratorship 0.004 0.004 0.001 0.004 0.004 0.001 ------Employees Benefit Plans Under Trust 1.335 1.369 1.729 1.335 1.369 1.729 ------Escrow 42.222 7.041 7.219 42.222 7.041 7.219 ------Personal Trust 14.259 19.472 20.970 14.259 19.472 20.970 ------Pre-need Plans 7.139 8.373 12.166 7.139 8.373 12.166 ------Other Institutional Trust 5.242 6.336 7.354 5.242 6.336 7.354 ------Others 16.031 16.055 24.333 16.031 16.055 24.333 ------Common Trust Funds / Unit Investment Trust Fund 105.570 116.052 133.218 - - - 105.570 116.052 133.218 - - - 11.649 9.906 10.853 7.909 8.790 9.194 0.458 0.459 0.666 3.282 0.657 0.993 Other Accountabilities / Unearned Income 1/ Trust and Other Fidusiary Accounts 2/ Common Trust Funds / Unit Investment Trust Funds 3/ Investment Management Accounts Source : Supervisory Data Center, Supervision and Examination Sector Schedule 4.b TRUST AND FUND MANAGEMENT OPERATIONS - ASSETS AND ACCOUNTABILITIES UNIVERSAL AND COMMERCIAL BANKS As of Semesters-Ended Indicated (Amounts in Billion Pesos)
TOTAL TRUST TOFA 1/ CTF / UITF 2/ IMA 3/ Selected Accounts End-Dec '03 End-Jun '04 End-Dec '04 End-Dec '03 End-Jun '04 End-Dec '04 End-Dec '03 End-Jun '04 End-Dec '04 End-Dec '03 End-Jun '04 End-Dec '04 P/
TOTAL ASSETS 680.739 699.785 780.676 335.678 330.500 381.491 245.389 268.698 293.600 99.672 100.587 105.585
Peso / Regular Assets 483.541 519.627 568.155 244.239 266.598 302.400 139.630 152.442 160.170 99.672 100.587 105.585 Cash and Due from Banks 44.293 46.462 58.106 16.676 17.064 19.047 19.346 20.401 26.297 8.271 8.997 12.762 Loans and Discounts (net) 57.734 65.143 57.044 18.778 23.663 27.139 24.732 25.083 15.561 14.224 16.397 14.344 Investments (net) 352.181 382.311 415.236 186.094 206.120 224.765 92.937 104.099 115.155 73.150 72.092 75.316 Real & Other Properties Acquired in Settlement of Loans (net) 0.872 0.976 0.681 0.422 0.517 0.398 0.337 0.239 0.185 0.113 0.220 0.098 Others 28.461 24.735 37.088 22.269 19.234 31.051 2.278 2.620 2.972 3.914 2.881 3.065 FCDU/EFCDU Assets 197.198 180.158 212.521 91.439 63.902 79.091 105.759 116.256 133.430 - - - Cash and Due from Banks 37.541 34.435 43.734 10.741 8.998 9.599 26.800 25.437 34.135 Loans and Discounts (net) 1.987 1.634 3.326 1.095 0.395 2.641 0.892 1.239 0.685 Investments (net) 152.950 140.772 152.314 77.991 53.067 55.496 74.959 87.705 96.818 Real & Other Properties Acquired in Settlement of Loans (net) 0.014 0.009 - - - - 0.014 0.009 - Others 4.706 3.308 13.147 1.612 1.442 11.355 3.094 1.866 1.792
TOTAL ACCOUNTABILITIES 680.739 699.785 780.676 335.678 330.500 381.491 245.389 268.698 293.600 99.672 100.587 105.585
Peso / Regular Accountabilities 477.539 515.435 563.169 241.694 263.204 298.703 139.393 152.243 159.796 96.452 99.988 104.670 Trust and Other Fiduciary Accounts 241.694 263.204 298.703 241.694 263.204 298.703 ------Administratorship 25.208 26.912 27.483 25.208 26.912 27.483 Employees Benefit Plans Under Trust 70.443 74.657 80.625 70.443 74.657 80.625 Escrow 8.050 8.411 8.633 8.050 8.411 8.633 Personal Trust 79.511 85.437 93.692 79.511 85.437 93.692 Pre-need Plans 43.342 46.177 45.341 43.342 46.177 45.341 Other Institutional Trust 4.927 13.104 13.703 4.927 13.104 13.703 Others 10.213 8.506 29.226 10.213 8.506 29.226 Common Trust Funds / Unit Investment Trust Fund 139.393 152.243 159.796 139.393 152.243 159.796 Investment Management Accounts 96.452 99.988 104.670 96.452 99.988 104.670 FCDU / EFCDU Accountabilities 191.802 174.702 206.990 86.232 58.650 73.772 105.570 116.052 133.218 - - - Trust and Other Fiduciary Accounts 86.232 58.650 73.772 86.232 58.650 73.772 Administratorship 0.004 0.004 0.001 0.004 0.004 0.001 Employees Benefit Plans Under Trust 1.335 1.369 1.729 1.335 1.369 1.729 Escrow 42.222 7.041 7.219 42.222 7.041 7.219 Personal Trust 14.259 19.472 20.970 14.259 19.472 20.970 Pre-need Plans 7.139 8.373 12.166 7.139 8.373 12.166 Other Institutional Trust 5.242 6.336 7.354 5.242 6.336 7.354 Others 16.031 16.055 24.333 16.031 16.055 24.333 Common Trust Funds / Unit Investment Trust Fund 105.570 116.052 133.218 105.570 116.052 133.218 11.398 9.648 10.517 7.752 8.646 9.016 0.426 0.403 0.586 3.220 0.599 0.915 Other Accountabilities / Unearned Income 1/ Trust and Other Fidusiary Accounts 2/ Common Trust Funds / Unit Investment Trust Funds 3/ Investment Management Accounts Source : Supervisory Data Center, Supervision and Examination Sector Schedule 4.c TRUST AND FUND MANAGEMENT OPERATIONS - ASSETS AND ACCOUNTABILITIES THRIFT BANKS As of Semesters-Ended Indicated (Amounts in Billion Pesos)
TOTAL TRUST TOFA 1/ CTF / UITF 2/ IMA 3/ Selected Accounts End-Dec '03 End-Jun '04 End-Dec '04 End-Dec '03 End-Jun '04 End-Dec '04 End-Dec '03 End-Jun '04 End-Dec '04 End-Dec '03 End-Jun '04 End-Dec '04
TOTAL ASSETS 19.261 22.921 24.974 13.038 15.657 18.507 4.169 3.799 3.746 2.054 3.465 2.721
Peso / Regular Assets 19.261 22.921 24.974 13.038 15.657 18.507 4.169 3.799 3.746 2.054 3.465 2.721 Cash and Due from Banks 1.722 1.939 2.929 1.114 0.791 1.409 0.350 0.331 0.594 0.258 0.817 0.926 Loans and Discounts (net) 0.907 0.720 0.669 0.316 0.245 0.216 0.317 0.244 0.247 0.274 0.231 0.206 Investments (net) 15.877 19.412 20.453 10.983 13.915 16.108 3.415 3.143 2.813 1.479 2.354 1.532 Real & Other Properties Acquired in Settlement of Loans (net) 0.013 0.013 0.013 0.013 0.013 0.013 ------Others 0.742 0.837 0.910 0.612 0.693 0.761 0.087 0.081 0.092 0.043 0.063 0.057 FCDU/EFCDU Assets ------Cash and Due from Banks - - - Loans and Discounts (net) - - - Investments (net) - - - Real & Other Properties Acquired in Settlement of Loans (net) - - - Others - - -
TOTAL ACCOUNTABILITIES 19.261 22.921 24.974 13.038 15.657 18.507 4.169 3.799 3.746 2.054 3.465 2.721
Peso / Regular Accountabilities 19.042 22.687 24.663 12.885 15.518 18.333 4.147 3.749 3.671 2.010 3.420 2.659 Trust and Other Fiduciary Accounts 12.885 15.518 18.333 12.885 15.518 18.333 ------Administratorship 0.005 0.003 0.002 0.005 0.003 0.002 Employees Benefit Plans Under Trust 0.752 0.860 1.154 0.752 0.860 1.154 Escrow 1.058 0.351 0.268 1.058 0.351 0.268 Personal Trust 0.898 1.450 1.711 0.898 1.450 1.711 Pre-need Plans 10.010 12.688 15.171 10.010 12.688 15.171 Other Institutional Trust ------Others 0.162 0.166 0.027 0.162 0.166 0.027 Common Trust Funds / Unit Investment Trust Fund 4.147 3.749 3.671 4.147 3.749 3.671 Investment Management Accounts 2.010 3.420 2.659 2.010 3.420 2.659 FCDU / EFCDU Accountabilities ------Trust and Other Fiduciary Accounts ------Administratorship - - - Employees Benefit Plans Under Trust - - - Escrow - - - Personal Trust - - - Pre-need Plans - - - Other Institutional Trust - - - Others - - - Common Trust Funds / Unit Investment Trust Fund - - - 0.219 0.234 0.311 0.153 0.139 0.174 0.022 0.050 0.075 0.044 0.045 0.062 Other Accountabilities / Unearned Income 1/ Trust and Other Fidusiary Accounts 2/ Common Trust Funds / Unit Investment Trust Funds 3/ Investment Management Accounts Source : Supervisory Data Center, Supervision and Examination Sector Schedule 4.d TRUST AND FUND MANAGEMENT OPERATIONS - ASSETS AND ACCOUNTABILITIES NON-BANK FINANCIAL INSTITUTIONS (NBFIs) As of Semesters-Ended Indicated (Amounts in Billion Pesos)
TOTAL TRUST TOFA 1/ CTF / UITF 2/ IMA 3/ Selected Accounts End-Dec '03 End-Jun '04 End-Dec '04 End-Dec '03 End-Jun '04 End-Dec '04 End-Dec '03 End-Jun '04 End-Dec '04 End-Dec '03 End-Jun '04 End-Dec '04
TOTAL ASSETS 7.005 6.743 7.181 3.082 2.963 3.226 0.300 0.255 0.098 3.623 3.525 3.857
Peso / Regular Assets 7.005 6.743 7.181 3.082 2.963 3.226 0.300 0.255 0.098 3.623 3.525 3.857 Cash and Due from Banks 0.433 0.317 0.328 0.293 0.217 0.216 0.056 0.048 0.038 0.084 0.052 0.074 Loans and Discounts (net) 2.127 2.157 2.118 0.393 0.457 0.299 0.007 0.007 0.005 1.727 1.693 1.814 Investments (net) 3.930 3.762 4.267 2.203 2.106 2.578 0.201 0.165 0.023 1.526 1.491 1.666 Real & Other Properties Acquired in Settlement of Loans (net) 0.022 0.022 0.022 0.011 0.011 0.011 0.001 - - 0.010 0.011 0.011 Others 0.493 0.485 0.446 0.182 0.172 0.122 0.035 0.035 0.032 0.276 0.278 0.292 FCDU/EFCDU Assets ------Cash and Due from Banks - - - Loans and Discounts (net) - - - Investments (net) - - - Real & Other Properties Acquired in Settlement of Loans (net) - - - Others - - -
TOTAL ACCOUNTABILITIES 7.005 6.743 7.181 3.082 2.963 3.226 0.300 0.255 0.098 3.623 3.525 3.857
Peso / Regular Accountabilities 6.973 6.719 7.156 3.078 2.958 3.222 0.290 0.249 0.093 3.605 3.512 3.841 Trust and Other Fiduciary Accounts 3.078 2.958 3.222 3.078 2.958 3.222 ------Administratorship 0.006 0.006 0.002 0.006 0.006 0.002 Employees Benefit Plans Under Trust 0.535 0.550 0.819 0.535 0.550 0.819 Escrow 0.004 0.004 0.004 0.004 0.004 0.004 Personal Trust 1.058 1.040 1.025 1.058 1.040 1.025 Pre-need Plans 1.079 0.914 0.820 1.079 0.914 0.820 Other Institutional Trust 0.262 0.244 0.323 0.262 0.244 0.323 Others 0.134 0.200 0.229 0.134 0.200 0.229 Common Trust Funds / Unit Investment Trust Fund 0.290 0.249 0.093 0.290 0.249 0.093 Investment Management Accounts 3.605 3.512 3.841 3.605 3.512 3.841 FCDU / EFCDU Accountabilities ------Trust and Other Fiduciary Accounts ------Administratorship - - - Employees Benefit Plans Under Trust - - - Escrow - - - Personal Trust - - - Pre-need Plans - - - Other Institutional Trust - - - Others - - - Common Trust Funds / Unit Investment Trust Fund - - - 0.032 0.024 0.025 0.004 0.005 0.004 0.010 0.006 0.005 0.018 0.013 0.016 Other Accountabilities / Unearned Income 1/ Trust and Other Fidusiary Accounts 2/ Common Trust Funds / Unit Investment Trust Funds 3/ Investment Management Accounts Source : Supervisory Data Center, Supervision and Examination Sector Schedule 4.e TRUST AND FUND MANAGEMENT OPERATIONS - INCOME AND EXPENSE PHILIPPINE BANKS and NON-BANK FINANCIAL INSTITUTIONS (NBFIs) For the Periods-Ended Indicated (Amounts in Billion Pesos)
ALL BANKS/NBFIs UNIVERSAL AND COMMERCIAL BANKS THRIFT BANKS NBFIs Selected Accounts End-Dec '03 End-Jun '04 End-Dec '04 End-Dec '03 End-Jun '04 End-Dec '04 End-Dec '03 End-Jun '04 End-Dec '04 End-Dec '03 End-Jun '04 End-Dec '04
TRUST INCOME 4.730 2.351 4.911 4.506 2.283 4.768 0.176 0.047 0.101 0.048 0.021 0.042
Fees and Commissions 4.682 2.342 4.892 4.461 2.275 4.752 0.173 0.046 0.098 0.048 0.021 0.042 Other Income 0.048 0.009 0.019 0.045 0.008 0.016 0.003 0.001 0.003 - - -
TRUST EXPENSES 1.612 0.594 1.303 1.498 0.559 1.234 0.074 0.020 0.043 0.040 0.015 0.026
Compensation/Fringe Benefits 0.563 0.249 0.530 0.523 0.229 0.492 0.025 0.012 0.024 0.015 0.008 0.014 Management and Professional Fees 0.043 0.012 0.028 0.042 0.011 0.025 - - 0.002 0.001 0.001 0.001 Depreciation/Amortization 0.064 0.029 0.056 0.059 0.027 0.052 0.003 0.001 0.002 0.002 0.001 0.002 Taxes and Licenses 0.099 0.068 0.187 0.097 0.066 0.183 0.001 0.001 0.003 0.001 0.001 0.001 Other Expenses 0.843 0.236 0.502 0.777 0.226 0.482 0.045 0.006 0.012 0.021 0.004 0.008
Rent 0.022 0.014 0.002 0.013 0.022 0.001 0.002 - Power, Light and Water 0.005 0.005 0.001 0.005 0.005 - 0.001 - Advertising and Publicity - 0.006 - 0.006 - - - - Postage, Telephone, Cable and Telegram - 0.006 - 0.006 - Miscellaneous Expenses 0.018 0.205 0.009 0.196 0.018 0.005 0.009 0.004
OPERATING INCOME / (LOSS) 3.118 1.757 3.608 3.008 1.724 3.534 0.102 0.027 0.058 0.008 0.006 0.016
Source : Supervisory Data Center, Supervision and Examination Sector Schedule 5 COMPARATIVE STATEMENT OF INCOME AND EXPENSES PHILIPPINE BANKS and NON-BANKS with QUASI-BANKING FUNCTIONS (NBQBs) For the Period-Ended Indicated (Amounts in Billion Pesos)
BANKS/NBQBs BANKS NBQBs Selected Accounts Jan-Dec '03 Jan-Jun '04 Jan-Dec '04 Jan-Dec '03 Jan-Jun '04 r / Jan-Dec '04p / Jan-Dec '03 Jan-Jun '04 Jan-Dec '04
OPERATING INCOME 176.163 88.352 191.600 174.176 87.382 189.262 1.987 0.970 2.338
Net Interest Income 103.686 60.504 129.130 102.876 60.010 128.122 0.810 0.494 1.008 Interest Income 206.011 115.540 244.579 204.621 114.688 242.808 1.390 0.852 1.771 Less: Interest Expenses 102.325 55.036 115.449 101.745 54.678 114.686 0.580 0.358 0.763
Non-interest Income 72.477 27.848 62.470 71.300 27.372 61.140 1.177 0.476 1.330 Fee-based Income 24.846 13.184 28.010 24.306 12.851 27.336 0.540 0.333 0.674 Trading Income/(Loss) 33.341 6.767 16.244 32.921 6.418 15.672 0.420 0.349 0.572 Trust Department Income 4.415 2.249 4.784 4.415 2.249 4.700 0.084 Other Income/(Loss) 9.875 5.648 13.432 9.658 5.854 13.432 0.217 (0.206)
OPERATING EXPENSES 144.834 72.314 152.816 143.733 71.708 151.816 1.101 0.606 1.000
Bad Debts Written Off 0.066 0.029 0.082 0.065 0.029 0.082 0.001
Provision for Probable Losses 23.616 9.643 19.727 23.593 9.459 19.657 0.023 0.184 0.070
Other Operating Expenses 121.152 62.642 133.007 120.075 62.220 132.077 1.077 0.422 0.930 Overhead Costs 80.900 41.200 86.108 80.023 40.885 85.383 0.877 0.315 0.725 Other Expenses 40.252 21.442 46.899 40.052 21.335 46.694 0.200 0.107 0.205
NET OPERATING INCOME (LOSS) 31.329 16.039 38.784 30.443 15.675 37.446 0.886 0.364 1.338
EXTRAORDINARY CREDITS/(CHARGES) 19.677 5.361 8.329 19.117 5.141 7.960 0.560 0.220 0.369
NET INCOME/(LOSS) BEFORE TAX 51.006 21.399 47.113 49.560 20.815 45.406 1.446 0.584 1.707
Provision for income tax 9.807 4.360 10.818 9.661 4.139 10.329 0.146 0.221 0.489
NET INCOME/(LOSS) AFTER TAX 41.199 17.039 36.295 39.899 16.676 35.077 1.300 0.363 1.218
Profitability Return on Assets (%) 1.12 1.08 0.94 1.12 1.08 0.91 4.48 0.89 3.91 Return on Equity (%) 8.44 8.05 7.13 8.45 8.27 7.12 8.01 1.63 7.43 r/ Revised p/Preliminary
Source : Supervisory Data Center, Supervision and Examination Sector Schedule 5.a COMPARATIVE STATEMENT OF INCOME AND EXPENSES PHILIPPINE BANKING SYSTEM For the Period-Ended Indicated (Amounts in Billion Pesos)
1/ ALL BANKS UNIVERSAL & COMMERCIAL BANKS THRIFT BANKS RURAL AND COOPERATIVE BANKS Selected Accounts Jan-Dec '03 Jan-Jun '04r/p1 Jan-Dec '04/ Jan-Dec '03 Jan-Jun '04 Jan-Dec '04 Jan-Dec '03 Jan-Jun '04 Jan-Dec '04p/ Jan-Dec '03 Jan-Jun '04r/p1 Jan-Dec '04 / / / OPERATING INCOME 174.176 87.382 189.262 151.204 75.172 163.792 14.351 7.583 15.599 8.621 4.627 9.871
Net Interest Income 102.876 60.010 128.122 86.380 51.148 109.351 10.603 5.684 11.950 5.893 3.178 6.821 Interest Income 204.621 114.688 242.808 173.926 97.789 207.289 20.636 11.423 23.960 10.059 5.476 11.559 Less: Interest Expenses 101.745 54.678 114.686 87.546 46.641 97.938 10.033 5.739 12.010 4.166 2.298 4.738
Non-interest Income 71.300 27.372 61.140 64.824 24.024 54.441 3.748 1.899 3.649 2.728 1.449 3.050 Fee-based Income 24.306 12.851 27.336 20.244 10.641 22.723 2.017 1.155 2.391 2.045 1.055 2.222 Trading Income/(Loss) 32.921 6.418 15.672 32.044 6.156 15.261 0.842 0.247 0.383 0.035 0.015 0.028 Trust Department Income 4.415 2.249 4.700 4.301 2.200 4.601 0.114 0.049 0.099 - - - Other Income/(Loss) 9.658 5.854 13.432 8.235 5.027 11.856 0.775 0.448 0.776 0.648 0.379 0.800
OPERATING EXPENSES 143.733 71.708 151.816 121.432 60.063 127.168 15.006 7.805 16.344 7.295 3.840 8.304
Bad Debts Written Off 0.065 0.029 0.082 0.006 0.007 0.012 0.004 0.003 0.014 0.055 0.019 0.056
Provision for Probable Losses 23.593 9.459 19.657 21.869 8.605 17.936 1.548 0.731 1.423 0.176 0.123 0.298
Other Operating Expenses 120.075 62.220 132.077 99.557 51.451 109.220 13.454 7.071 14.907 7.064 3.698 7.950 Overhead Costs 80.023 40.885 85.383 66.578 33.931 70.740 8.743 4.500 9.382 4.702 2.454 5.261 Other Expenses 40.052 21.335 46.694 32.979 17.520 38.480 4.711 2.571 5.525 2.362 1.244 2.689
NET OPERATING INCOME (LOSS) 30.443 15.675 37.446 29.772 15.109 36.624 (0.655) (0.221) (0.745) 1.326 0.787 1.567
EXTRAORDINARY CREDITS/(CHARGES) 19.117 5.141 7.960 17.948 4.325 6.118 0.756 0.560 1.354 0.413 0.256 0.488
NET INCOME/(LOSS) BEFORE TAX 49.560 20.815 45.406 47.720 19.434 42.742 0.101 0.338 0.609 1.739 1.043 2.055
Provision for income tax 9.661 4.139 10.329 9.068 3.745 9.475 0.349 0.281 0.566 0.244 0.113 0.288
NET INCOME/(LOSS) AFTER TAX 39.899 16.676 35.077 38.652 15.689 33.267 (0.248) 0.057 0.043 1.495 0.930 1.767
Profitability Return on Assets (%) 1.12 1.08 0.91 1.20 1.16 0.96 (0.09) (0.08) 0.01 1.75 1.92 1.86 Return on Equity (%) 8.45 8.27 7.12 9.29 8.98 7.61 (0.59) (0.54) 0.11 10.86 12.19 11.71
1/ Inclusive of 3 branches of foreign banks with universal banking license, other foreign bank branches and subsidiaries, and 3 government banks: Development Bank of the Philippines (DBP), Land Bank of the Philippines (LBP), and Al Amanah Islamic Bank r/ Revised p/Preliminary
Source : Supervisory Data Center, Supervision and Examination Sector Schedule 5.b COMPARATIVE STATEMENT OF INCOME AND EXPENSES UNIVERSAL AND COMMERCIAL BANKING SYSTEM For the Period-Ended Indicated (Amounts in Billion Pesos)
TOTAL UNIVERSAL BANKS 1/ REGULAR COMMERCIAL BANKS 2/ Selected Accounts Jan-Dec '03 Jan-Jun '04 Jan-Dec '04 Jan-Dec '03 Jan-Jun '04 Jan-Dec '04 Jan-Dec '03 Jan-Jun '04 Jan-Dec '04
OPERATING INCOME 151.204 75.172 163.792 120.680 61.099 131.363 30.524 14.073 32.429
Net Interest Income 86.380 51.148 109.351 67.247 40.431 85.211 19.133 10.717 24.140 Interest Income 173.926 97.789 207.289 137.320 78.000 163.488 36.606 19.789 43.801 Less: Interest Expenses 87.546 46.641 97.938 70.073 37.569 78.277 17.473 9.072 19.661
Non-interest Income 64.824 24.024 54.441 53.433 20.668 46.152 11.391 3.356 8.289 Fee-based Income 20.244 10.641 22.723 15.869 8.037 17.370 4.375 2.604 5.353 Trading Income/(Loss) 32.044 6.156 15.261 26.568 5.968 14.253 5.476 0.188 1.008 Trust Department Income 4.301 2.200 4.601 3.907 2.012 4.218 0.394 0.188 0.383 Other Income/(Loss) 8.235 5.027 11.856 7.089 4.651 10.311 1.146 0.376 1.545
OPERATING EXPENSES 121.432 60.063 127.168 99.821 49.155 103.584 21.611 10.908 23.584
Bad Debts Written Off 0.006 0.007 0.012 0.006 0.007 0.007 - - 0.005
Provision for Probable Losses 21.869 8.605 17.936 18.702 7.548 15.112 3.167 1.057 2.824
Other Operating Expenses 99.557 51.451 109.220 81.113 41.600 88.465 18.444 9.851 20.755 Overhead Costs 66.578 33.931 70.740 55.322 27.915 58.171 11.256 6.016 12.569 Other Expenses 32.979 17.520 38.480 25.791 13.685 30.294 7.188 3.835 8.186
NET OPERATING INCOME (LOSS) 29.772 15.109 36.624 20.859 11.944 27.779 8.913 3.165 8.845
EXTRAORDINARY CREDITS/(CHARGES) 17.948 4.325 6.118 17.599 3.538 5.050 0.349 0.787 1.068
NET INCOME/(LOSS) BEFORE TAX 47.720 19.434 42.742 38.458 15.482 32.829 9.262 3.952 9.913
Provision for income tax 9.068 3.745 9.475 7.588 2.492 6.651 1.480 1.253 2.824
NET INCOME/(LOSS) AFTER TAX 38.652 15.689 33.267 30.870 12.990 26.178 7.782 2.699 7.089
Profitability Return on Assets (%) 1.20 1.16 0.96 1.18 1.16 0.93 1.29 1.15 1.08 Return on Equity (%) 9.29 8.98 7.61 9.49 9.49 7.79 8.55 7.26 7.00
1/ Inclusive of 3 branches of foreign banks with universal banking license and 3 government banks: Development Bank of the Philippines (DBP), Land Bank of the Philippines (LBP), and Al Amanah Islamic Bank 2/ Inclusive of the other foreign bank branches and subsidiaries
Source : Supervisory Data Center, Supervision and Examination Sector Schedule 5.c COMPARATIVE STATEMENT OF INCOME AND EXPENSES THRIFT BANKING SYSTEM For the Period-Ended Indicated (Amounts in Billion Pesos)
TOTAL FINANCIAL INSTITUTION LINKED BANKS NON-LINKED BANKS Selected Accounts Jan-Dec '03 Jan-Jun '04 Jan-Dec '04 p / Jan-Dec '03 Jan-Jun '04 Jan-Dec '04 p / Jan-Dec '03 Jan-Jun '04 Jan-Dec '04
OPERATING INCOME 14.351 7.583 15.599 8.259 4.505 10.792 6.092 3.078 4.807
Net Interest Income 10.603 5.684 11.950 6.634 3.640 8.944 3.969 2.044 3.006 Interest Income 20.636 11.423 23.960 11.427 6.513 16.823 9.209 4.910 7.137 Less: Interest Expenses 10.033 5.739 12.010 4.793 2.873 7.879 5.240 2.866 4.131
Non-interest Income 3.748 1.899 3.649 1.625 0.865 1.848 2.123 1.034 1.801 Fee-based Income 2.017 1.155 2.391 0.875 0.479 1.199 1.142 0.676 1.192 Trading Income/(Loss) 0.842 0.247 0.383 0.378 0.141 0.226 0.464 0.106 0.157 Trust Department Income 0.114 0.049 0.099 0.032 0.015 0.033 0.082 0.034 0.066 Other Income/(Loss) 0.775 0.448 0.776 0.340 0.230 0.390 0.435 0.218 0.386
OPERATING EXPENSES 15.006 7.805 16.344 6.736 3.723 9.056 8.270 4.082 7.288
Bad Debts Written Off 0.004 0.003 0.014 0.000 0.000 0.000 0.004 0.003 0.014
Provision for Probable Losses 1.548 0.731 1.423 0.486 0.373 0.763 1.062 0.358 0.660
Other Operating Expenses 13.454 7.071 14.907 6.250 3.350 8.293 7.204 3.721 6.614 Overhead Costs 8.743 4.500 9.382 4.302 2.227 5.310 4.441 2.273 4.072 Other Expenses 4.711 2.571 5.525 1.948 1.123 2.983 2.763 1.448 2.542
NET OPERATING INCOME (LOSS) (0.655) (0.221) (0.745) 1.523 0.782 1.736 (2.178) (1.004) (2.481)
EXTRAORDINARY CREDITS/(CHARGES) 0.756 0.560 1.354 0.160 0.144 0.503 0.596 0.416 0.851
NET INCOME/(LOSS) BEFORE TAX 0.101 0.338 0.609 1.683 0.926 2.239 (1.582) (0.588) (1.630)
Provision for income tax 0.349 0.281 0.566 0.282 0.160 0.410 0.067 0.121 0.156
NET INCOME/(LOSS) AFTER TAX (0.248) 0.057 0.043 1.401 0.766 1.829 (1.649) (0.709) (1.786)
Profitability Return on Assets (%) (0.09) (0.08) 0.01 1.00 1.05 1.05 (1.34) (1.41) (1.54) Return on Equity (%) (0.59) (0.54) 0.11 8.24 9.23 9.82 (6.63) (7.29) (8.19) p/Preliminary
Source : Supervisory Data Center, Supervision and Examination Sector Schedule 5.d COMPARATIVE STATEMENT OF INCOME AND EXPENSES RURAL AND COOPERATIVE BANKING SYSTEM For the Period-Ended Indicated (Amounts in Billion Pesos)
TOTAL RURAL BANKS COOPERATIVE BANKS Selected Accounts Jan-Dec '03 Jan-Jun '04 r/ Jan-Dec '04 p/ Jan-Dec '03 Jan-Jun '04 r/ Jan-Dec '04 p/ Jan-Dec '03 Jan-Jun '04 r/ Jan-Dec '04 p/
OPERATING INCOME 8.621 4.627 9.871 7.987 4.289 9.152 0.634 0.338 0.719
Net Interest Income 5.893 3.178 6.821 5.556 3.006 6.452 0.337 0.172 0.369 Interest Income 10.059 5.476 11.559 9.367 5.109 10.783 0.692 0.367 0.776 Less: Interest Expenses 4.166 2.298 4.738 3.811 2.103 4.331 0.355 0.195 0.407
Non-interest Income 2.728 1.449 3.050 2.431 1.283 2.700 0.297 0.166 0.350 Fee-based Income 2.045 1.055 2.222 1.814 0.931 1.963 0.231 0.124 0.259 Trading Income/(Loss) 0.035 0.015 0.028 0.034 0.015 0.027 0.001 - 0.001 Trust Department Income ------Other Income/(Loss) 0.648 0.379 0.800 0.583 0.337 0.710 0.065 0.042 0.090
OPERATING EXPENSES 7.295 3.840 8.304 6.775 3.573 7.710 0.520 0.267 0.594
Bad Debts Written Off 0.055 0.019 0.056 0.054 0.018 0.054 0.001 0.001 0.002
Provision for Probable Losses 0.176 0.123 0.298 0.161 0.111 0.268 0.015 0.012 0.030
Other Operating Expenses 7.064 3.698 7.950 6.560 3.444 7.388 0.504 0.254 0.562 Overhead Costs 4.702 2.454 5.261 4.353 2.275 4.874 0.349 0.179 0.387 Other Expenses 2.362 1.244 2.689 2.207 1.169 2.514 0.155 0.075 0.175
NET OPERATING INCOME (LOSS) 1.326 0.787 1.567 1.212 0.716 1.442 0.114 0.071 0.125
EXTRAORDINARY CREDITS/(CHARGES) 0.413 0.256 0.488 0.397 0.248 0.471 0.016 0.008 0.017
NET INCOME/(LOSS) BEFORE TAX 1.739 1.043 2.055 1.609 0.964 1.913 0.130 0.079 0.142
Provision for income tax 0.244 0.113 0.288 0.243 0.113 0.288 0.001 - -
NET INCOME/(LOSS) AFTER TAX 1.495 0.930 1.767 1.366 0.851 1.625 0.129 0.079 0.142
Profitability Return on Assets (%) 1.75 1.92 1.86 1.71 1.90 1.83 2.35 2.28 2.35 Return on Equity (%) 10.86 12.19 11.71 10.61 12.08 11.56 14.37 13.70 13.82 r/ Revised p/Preliminary
Source : Supervisory Data Center, Supervision and Examination Sector Appendix 1
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
CHANGES IN BANK REGULATIONS FROM JANUARY TO DECEMBER 2004
A. CIRCULARS
BSP CIRCULAR PARTICULARS NO. DATE
414 1/13/04 Guidelines for managing large exposures and credit risk concentrations (MB Res. No. 1846 dated 18 Dec. 2003)
415 1/20/04 To approve the grant of eligibilities to the Tobacco Excise Tax Receivable Monetization Program Investment Certificates (TEXTR Certificates) backed by receivables representing the unreleased portion of the obligation of the National Government amounting to P1.85 billion to its Local Government Units for their share of the Tobacco Excise Taxes for the years 2001 and 2002 as liquidity floor for government deposits and security for the faithful performance of trust duties and investment management activities
416 1/21/04 To amend the guidelines on the adoption of the risk-based capital adequacy framework under Circular No. 280 dated 29 March 2001, as amended, so as (1) to reflect the reduction in the risk weight of certain multilateral development banks from 20% to 0%; (2) to remove from the list of 0% risk weighted assets loans to exporters to the extent guaranteed by the GFSME; and (3) to include the International Finance Corporation (IFC), the Nordic Investment Bank (NIB), the Caribbean Development Bank (CDB) and the Council of Europe Development Bank (CEDB) among the list of multilateral development banks assigned 0% risk weight (MB Res. No. 1843 dated 18 Dec. 2003)
417 1/28/04 Guidelines for the capital treatment of banks’ investments in credit-linked notes (CLNs) and similar credit derivative products, such as credit-linked deposits (CLDs) and credit- linked loans (CLLs) (MB Res. No. 1845 dated 18 Dec. 2003)
418 2/05/04 To increase the liquidity reserve requirement against peso demand, savings, time deposits and deposit substitute liabilities for UBs and KBs and NBQBs by 2 percentage points to 10 percent from 8 percent effective 6 February 2004 (MB Res. No. 133 dated 5 Feb. 2004)
Source: Office of Supervisory Policy Development, Supervision and Examination Sector Page 1 of 16
Appendix 1
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
BSP CIRCULAR PARTICULARS NO. DATE
419 2/02/04 To amend further Section 11 of Circular No. 1389 dated 13 April 1993 approving the removal of the BSP registration requirement for importations under documents against acceptance (D/A) and open account (O/A) arrangements (MB Res. No. 78 dated 2 Feb. 2004)
420 2/10/04 Policy guidelines on the conversion and transfer of foreign currency-denominated loans, and Real and Other Properties Owned or Acquired (ROPOA) in the books of the Foreign Currency Deposit Unit (FCDU)/Expanded Foreign Currency Deposit Unit (EFCDU) to peso loans and ROPOA in the books of the Regular Banking Unit (RBU)
421 3/08/04 To amend Subsections X143.4 and 4143Q.4 of the MORB on disqualification procedures of the institution’s director/officer or employee and Subsections X143.5 and 4143Q.5 of the MORB on watchlisting procedures
422 3/09/04 To amend Section X145.c of the MORB and Sec. 4144Q.c of the MORNBFI on interlocking officerships so that the positions of president, chief executive officer, chief operating officer and chief financial officer or their equivalent may not be held concurrently between affiliated banks or between a bank and an affiliated non-bank financial intermediary other than an investment house
423 3/15/04 To amend Sections X326 to X338 of the MORB and their Subsections pertaining to loans and other credit accommodations to directors, officers, stockholders and their related interests to implement Section 36 of R.A. No. 8791 (The General Banking Law of 2000)
424 3/03/04 To allow all domestic private banks with BSP-approved Internet banking facility to accept payment of fees/other charges of similar nature for the account of the departments, bureaus, offices and agencies of the government, as well as all government-owned and controlled corporations. The funds so accepted/collected shall be treated as deposit liabilities subject to existing regulations on government deposits and shall not exceed the minimum working balance of said government entities
Source: Office of Supervisory Policy Development, Supervision and Examination Sector Page 2 of 16
Appendix 1
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
BSP CIRCULAR PARTICULARS NO. DATE
425 3/25/04 To amend Section X303, Subsections X303.1 to X303.5 and Subsection X347.2 of the MORB on credit exposure limits to a single borrower to implement Section 35 of R.A. No. 8791 (The General Banking Law of 2000)
426 4/01/04 To amend Sections 2 to 10 of Appendix 16 of the MORB pertaining to Sections 2274 and 3274 in line with the approval of the extension of the Countryside Financial Institutions Enhancement Program (CFIEP)
427 4/12/04 To allow an officer duly authorized by the bank’s board of directors to sign the Report on the Sworn Statement on Real Estate/Chattel Transactions under BSP Form Nos. NP06-KB, NP06-TB and RB/COB 20 provided that the transactions reported are being availed of strictly in accordance with the terms and conditions of a fringe benefit program approved by the bank’s board of directors and by the BSP, and the signatory to the certification is an officer duly authorized by the bank’s board of directors
428 4/27/04 The rules and regulations governing securities custodianship and securities registry operations of banks and non-bank financial institutions (NBFIs) under BSP supervision
429 5/11/04 To amend the MORB and the MORNBFI so as to add certain portions to Subsections X170.3 and 4191Q.3, the definition of compliance risk; Subsections X170.4 and 4191Q.4, the responsibility of the board of directors and senior management to oversee the implementation of the compliance policy and ensure that compliance issues are resolved expeditiously; Subsections X170.5 and 4191Q.5, the status of the compliance function within the organization; Subsections X170.6 and 4191Q.6, the independence of the compliance function from the business activities of the institution; Subsections X170.7 and 4191Q.7, the clear delineation of the role and responsibilities of the compliance function; Subsections X170.8 and 4191Q.8, the proper addressing of cross-border issues pertaining to the compliance function for institutions; and Subsections X170.9 and 4191Q.9, the establishment of policies for managing the risks on outsourcing activities
Source: Office of Supervisory Policy Development, Supervision and Examination Sector Page 3 of 16
Appendix 1
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
BSP CIRCULAR PARTICULARS NO. DATE
430 5/11/04 To implement Section 57 of the General Banking Law of 2000, Section X136, Subsection X136.2 and Subsection X136.3 of the MORB pertaining to declaration of dividends, the requirements thereof and the net amount available for dividends were amended
431 5/11/04 To implement Section 57 of the General Banking Law of 2000, Section 4126Q and Subsection 4126Q.2 of the MORNBFI relative to the declaration of dividends, the requirements thereof and the net amount available for dividends were amended
432 5/14/04 To amend certain provisions of the MORB and MORNBFI prescribing the rules and regulations governing the acceptance by a bank/NBFI, either directly or indirectly through its subsidiary, of its own shares of stock as collateral for loans granted
433 5/13/04 To allow banks to engage in repurchase agreements involving foreign currency denominated government securities subject to certain conditions
434 5/18/04 To amend Section 3 of Circular No. 283 dated 17 May 2001 so as to add under the specific duties and responsibilities of the board of directors, the creation of an Audit Committee to Subsections X141.4 and 4141Q.4 of the MOR; Item “a” of Section 4 of Circular No. 391 dated 15 July 2003 amending Subsections X143.5 and 4143Q.5 of the MOR on the confirmation by the Monetary Board of the election/appointment of directors and officers; Section 2 of Circular No. 341 dated 6 August 2002 which allows the Monetary Board to impose sanctions to any bank/quasi-bank or trust entity found to be conducting its business in an unsafe and unsound manner; Item “c”, Section 2 of Circular No. 246 dated 1 June 2000 applying the definition of Restructured Loans as performing or non-performing to NBQBs; Item “b(3)(c)” of Section 1, Circular No. 297 dated 17 September 2001 amending Subsections X602.1 and 4603Q.1 of the MOR to include compliance with the required reserves on ‘TOFA-Others” and liquidity reserves on government deposits as a prerequisite for engaging in derivatives transactions; and Subsections X415.2/4415Q.2 of the MOR which qualifies the securities enumerated in Subsections X405.2/4405Q.2 as eligible security deposit for faithful performance of investment management activities
Source: Office of Supervisory Policy Development, Supervision and Examination Sector Page 4 of 16
Appendix 1
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
BSP CIRCULAR PARTICULARS NO. DATE
435 6/11/04 To amend Item A.2.2, first paragraph of Annex “A” of BSP Circular No. 407 dated 30 September 2003 on “Inward Foreign Investments” so as to add the phrase: “the original BSRD or BSRD Letter-Advice together with the local broker’s sales invoice shall be presented on or before maturity date of the FX forward contract which coincides with the settlement date of the PSE sale transaction”, and the caption under Item B.1.2 to read as follows: “Under DA/OA, Documents Against Payment (DP) or Direct Remittance (DR)”
436 6/18/04 Minimum Guidelines for Fund Transfers and Minimum Guidelines for Correspondent Banking Account Opening and Customer Identification to be incorporated as part of the bank’s standard operating procedures manual and wider anti-money laundering program
437 6/23/04 To amend Subsection X163.11a.(10) of the MORB by adding electronic documents/messages as alternative compliance by banks with the mailing requirement in sending current account statements to depositors provided these banks shall have prior BSP-approved internet banking and shall observe the required retention of electronic data messages/documents under the E- Commerce Act
438 6/18/04 To amend item (a) of Subsection 1381.2, Limits on investments in non-allied enterprises, so as to delete item (iii), i.e., the equity investment of directors, officers and stockholders owning at least 2% of the bank or of the bank’s subsidiaries for the purpose of determining compliance with the 35% investment ceiling on the total equity/voting stock of a non-allied enterprise
439 7/05/04 Rules and regulations to govern the development and implementation of banks’ internal credit risk rating systems
440 7/09/04 To defer further the effectivity of Circular No. 392 dated 23 July 2003 on delivery of securities to:
a) 17 September 2004 (120 days from the effectivity date of Circular No. 428) for new securities transactions or those executed after 20 May 2004; and b) 16 November 2004 (60 days from 17 September 2004) for existing securities transactions or those executed on or before 20 May 2004
Source: Office of Supervisory Policy Development, Supervision and Examination Sector Page 5 of 16
Appendix 1
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
BSP CIRCULAR PARTICULARS NO. DATE
441 7/16/04 To approve the amendment to Subsections X141.1 and 4141Q.1 of the MORB and the MORNBFI, respectively, so that in case a director is unable to physically attend or participate in board meetings via teleconferencing or videoconferencing, the Corporate Secretary shall execute a notarized certification attesting that said director was given the agenda materials prior to the meeting and that the director’s comments/decisions thereon were submitted for deliberation/discussion and were taken up in the actual board meeting. The submission of said certification shall be considered compliance with the required 50% minimum attendance in board meetings
442 7/20/04 To add as Section X654 of the MORB, and at the end of Section 4654.Q of the MORNBFI the rules and regulations pertaining to bank examination which shall henceforth refer to an investigation of an institution by the BSP to determine compliance with laws and regulations and ensure that the institution is conducting its business in a safe and sound manner
443 8/13/04 To add a paragraph under Subsection X303.1.f of the MORB stipulating that commercial or business papers purchased by banks from small and medium enterprises (SMEs) which became past due or the maturities of which have been extended, shall be considered additional loan by the bank to the purchaser of goods or services from the SME and shall be entitled to an increased SBL equivalent to 10 percent of the net worth of the concerned bank if the purchasers are companies with credit ratings of at least “AA-“ or equivalent from a BSP-recognized rating agency
444 8/18/04 To amend the provisions of Subsec. X253.1 and Sec. 4246Q of the MORB and MORNBFI, respectively, by adding the proviso that deposit substitutes evidenced by repurchase agreements (repos) covering government securities up to the amount equivalent to the adjusted Tier 1 capital of the bank/quasi-bank shall be subject to the statutory reserve of 2%, and that such rate shall apply only to repos, the documentation of which conforms with, and were delivered to a BSP accredited third party custodian as required under existing BSP regulations
Source: Office of Supervisory Policy Development, Supervision and Examination Sector Page 6 of 16
Appendix 1
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
BSP CIRCULAR PARTICULARS NO. DATE
445 8/20/04 To approve the guidelines for the recognition of positions arising from banks’ foreign currency options in the computation of the net open foreign exchange position
446 9/03/04 To amend Sec. X145.c of the MORB and Sec. 4144Q.c of the MORNBFI so as to allow concurrent officerships between a bank/NBQB and not more than 2 of its subsidiary financial institutions, between 2 banks/NBQBs and 1 of their subsidiary non-bank financial intermediaries, between banks/NBQBs, between a bank and a non-bank financial intermediary other than an investment house, or between an NBQB and a non-bank financial intermediary provided that at least 20% but less than majority of the equity of each of the banks/NBQBs and non-bank financial intermediaries is owned by a holding company or a bank/NBQB and the interlocking arrangement is necessary for the holding company or the bank to provide technical expertise or managerial assistance to its affiliates
447 9/03/04 Regulations governing the creation, administration and investment/s of Unit Investment Trust Funds
448 9/03/04 To amend the provisions of Circular No. 1389 dated 13 April 1993 and Circular No. 433 dated 13 May 2004 so as to allow the use of IBODI holdings in securities lending and repurchase agreements by banks, and the provisions of the Manual of Accounts for Universal Banks and Commercial Banks and the Manual of Accounts for Thrift Banks so as to create subsidiary ledger accounts under the general ledger account “Investment in Bonds and Other Debt Instruments”
449 9/06/04 To approve the amendment of Section 4, Transitory Provisions of Circular No. 322 dated 7 March 2002, as amended by Circular No. 367 dated 6 February 2003 so as to require an evenly distributed annual cash infusion over the BSP approved capital build-up program up to 31 December 2007 for TBs to meet the minimum required capital for FCDU
Source: Office of Supervisory Policy Development, Supervision and Examination Sector Page 7 of 16
Appendix 1
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
BSP CIRCULAR PARTICULARS NO. DATE
450 9/06/04 To amend the provisions of the MORNBFI pertaining to the delivery of securities in which securities, warehouse receipts, quedans and other documents of title which are the subject of quasi-banking functions, such as repurchase agreements, shall be physically delivered, if certificated, to a BSP accredited custodian that is mutually acceptable to the lender/purchaser and borrower/seller, or by means of book- entry transfer to the appropriate securities account of the BSP accredited custodian in a registry for said securities
451 9/14/04 To incorporate the Revised Implementing Rules and Regulations (IRRs) of R.A. No. 9160 (The Anti-Money Laundering Act of 2001), as amended by R.A. No. 9194, in the 2003 updates of the MORB (as Appendix 52) and the MORNBFI (as Appendices Q-25, S-7, P-6 and N-4); adopt the Anti-Money Laundering Council Resolution No. 292 dated 24 October 2003, as amended by Resolution No. 317 dated 30 December 2003 on covered transactions reports and incorporate the same in the MORB (as Annex A of Appendix 52a) and MORNBFI (as Annexes Q-23-a, S-6-a, P-5-a and N-3- a); and delete “suspension of rediscounting privileges” as a sanction on quasi-banks for violation of prescribed FX position limits which is imposed under Section 9 of Circular No. 407 dated 30 September 2003 and Circular Letter dated 13 March 1998
452 9/22/04 Issuance of regulations applicable to Common Trust Funds (CTFs) such that outstanding CTFs shall be subject to the legal and liquidity reserve requirements applicable to deposit substitutes effective 1 April 2005 and investments in securities of all existing CTFs shall be delivered to a BSP- accredited third party custodian (as prescribed under Item “b” of Subsection UX410.11/U4410.11 of Circular No. 447) not later than 31 October 2004
453 9/24/04 To set on 16 November 2004 the effectivity date of Circular No. 392 dated 23 July 2003 for all securities transactions regardless of the date of their execution
454 9/24/04 To amend the regulations (Circular No. 398 dated 21 August 2003) governing the credit card operations of banks and subsidiary credit card companies
Source: Office of Supervisory Policy Development, Supervision and Examination Sector Page 8 of 16
Appendix 1
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
BSP CIRCULAR PARTICULARS NO. DATE
455 9/29/04 To amend Section 5 of Circular No. 410 dated 29 October 2003 (Effectivity of Selection and Inclusion in BSP List) so as to specify that the selection of external auditors shall be valid for a period of three years after which the external auditors shall apply for renewal of their selection subject to an annual performance assessment by the Supervision and Examination Sector (SES)
456 10/04/04 To amend Subsecs. X141.3.c(9) and 4141Q.3.c(9) of the MORB and MORNBFI pertaining to the specific duties and responsibilities of the board of directors in banks’ various committees, i.e., audit, corporate governance and risk management committees
457 10/14/04 Regulations governing securities custodianship operations of banks and NBFIs clarifying that securities sold on a without recourse basis shall be delivered to the purchaser or to his designated custodian duly accredited by the BSP provided that a bank/other entity authorized by the BSP to perform custodianship function may not be allowed to be custodian of securities issued or sold on a without recourse basis by said bank/entity, its subsidiaries or affiliates, or of securities in bearer form
458 11/02/04 To amend Section 9 of Circular No. 428 dated 27 April 2004 pertaining to the independence of BSP-accredited securities registry and BSP-accredited custodian by adding item c and amending the last paragraph which exempts insurance companies under certain conditions from the independence requirement of this Section
459 11/11/04 To implement Section 6 of R.A. No. 8791 relating to the exercise of quasi-banking functions by amending Subsections X234.4 and X234.5 of the MORB and Sections 4102Q and 4103Q of the MORNBFI, and by deleting the provisions of Subsections 4102Q.1 to 4102Q.3 of the MORNBFI
460 11/12/04 Effectivity date of Circular No. 392 dated 23 July 2003 for all securities transactions, regardless of the date of their execution is set on 1 January 2005
Source: Office of Supervisory Policy Development, Supervision and Examination Sector Page 9 of 16
Appendix 1
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
BSP CIRCULAR PARTICULARS NO. DATE
461 11/17/04 To amend Section X231 of the MORB so as to remove the minimum term of time deposits accepted/offered by banks
462 12/14/04 Rules and regulations governing the qualification and accreditation of private banks and NBFIs acting as trustee on any mortgage or bond issuance by any municipality, government-owned or controlled corporation or any body politic
463 12/29/04 To implement Section 49 (provisions for losses and write-offs) of the GBL requiring banks to develop and maintain an appropriate, systematic and uniformly applied process in determining the amount of reserves for bad debts or doubtful accounts
B. CIRCULAR LETTERS
DATE PARTICULARS
1/20/04 Recognition by BSP of the Philippine Rating Services Corporation (Philratings) as a domestic rating agency for bank supervisory purposes
1/20/04 To request all banks and NBFIs to actively participate in public awareness campaign informing all its clients of the various e-mail messages received by the Philippine Embassy in Washington D.C. about unscrupulous business proposals involving large amount of money from suspicious individuals abroad similar to money laundering schemes
2/09/04 Guidelines for implementing Circular No. 419 concerning documents against acceptance (D/A) and open account (O/A) imports
2/10/04 To inform all commercial banks, securities dealers/brokers and others concerned of the letter of the Governor dated 4 February 2004 to the Philippine Stock Exchange (PSE) on the approval of the MB, under its Resolution No. 52 dated 22 January 2004 of the request of the PSE that foreign investments in shares of stock acquired in the DDT Facility be allowed special BSP registration under Section 32 of Circular No. 1389 dated 13 April 1993 subject to certain conditions
2/18/04 To bring to the attention of all banks and NBFIs the modus operandi of a syndicated group involving forged/faked/spurious checks in the cities of Cagayan de Oro, Iligan and Davao, as well as the proliferation of fake 1,000- and 500- peso bills in said area
Source: Office of Supervisory Policy Development, Supervision and Examination Sector Page 10 of 16
Appendix 1
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
DATE PARTICULARS
2/20/04 To enjoin banks to take necessary precautions in accepting deposit of second endorsed individual checks, especially those in unusually large volumes, in light recent reports on irregularities involving forged endorsements of dividend check issued by Paying Agent Banks of certain corporations
3/16/04 Additional guidelines/clarifications for implementing Circular No. 419 concernin documents against acceptance (D/A) and open account (O/A) imports
3/19/04 Transfer of inter-regional clearing operations to the Philippine Clearing Hou Corporation (PCHC) Secondary Processing Site in Makati effective 22 March 200 and to direct all rural, cooperative and microfinance-oriented banks to (i) depos their legal reserve requirements directly to the nearest BSP Regional Office and/o (ii) issue a written authority to SED IV to charge/debit their demand deposit wi BSP for payments of supervisory fees, penalties and other accounts
4/02/04 To defer to 30 June 2004 from 1 April 2004 the effectivity of Circular No. 392 date 23 July 2003 on delivery of securities
4/26/04 To enjoin all banks and non-bank financial institutions to encourage its employee clients and the general public to exercise vigilance and report any suspiciou activities to the proper authorities, and to use its premises for the display of poste on the subject, in line with the nationwide campaign of the Task Force for th Security of Critical Infrastructure (TFSCI), Office of the President, in cooperatio with the Philippine Information Agency, to prevent terrorist attacks
4/28/04 To require all authorized agent banks, non-bank BSP-supervised entities (NBBSE and their subsidiary/affiliate forex corporations to: a) remit the sale of foreig exchange for trade purposes being credited to FCDU deposit accounts within days from the date of credit and b) obtain from depositors a waiver on the secrec of deposits to enable BSP to validate authenticity of credits and eventu remittance
4/28/04 To amend certain sections of Circular-Letter dated 24 January 2002, as follows:
(a) on Item 1.b, to add the sentences…”Authorized bank officers shall accomplis a duly notarized certification that original documents were presented an duly stamped. This certification shall be maintained by the stamping ban together with the photocopies of shipping documents and be made availab for BSP verification”;
(b) on Item 1.c.1.1.2, to insert on the last paragraph the phrase, “shall be du notarized” ; and
(c) on Item II.a, to insert on the first paragraph the sentence, “Authorized ban officers shall accomplish a duly notarized certification that origin documents were presented and duly stamped.”
Source: Office of Supervisory Policy Development, Supervision and Examination Sector Page 11 of 16
Appendix 1
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
DATE PARTICULARS
5/13/04 To inform all banks of the Anti-Money Laundering Council (AMLC) Res. No. 361 dated 28 April 2004 on so-called “text scam” involving suspicious transactions and request banks to be more vigilant by making appropriate arrangements with companies availing of the bank’s ATM payroll facilities to prevent proliferation of this type of scam
6/18/04 To clarify Circular No. 222 dated 24 December 1999 that Overseas Filipino Workers (OFWs) are considered “residents” and could avail of peso loans from Philippine Banks for utilization in the Philippines
7/02/04 To remind all banks and non-bank financial institutions that all their transactions whether conducted by its regular banking unit, trust department, Foreign Currency Deposit Unit (FCDU or any other unit are covered by reporting requirements as provided for under Sections 1 and 9 of R.A. No. 9160, otherwise known as the “Anti-Money Laundering Act of 2001”, as amended by R.A. No. 9194
10/20/04 To enjoin all banks and NBFIs to submit directly to the AMLC reports of covered/suspicious transactions involving the Al-Haramain Foundation and Mr. Suliman Al-Buthe, which are suspected of engaging in activities on behalf of and in support of the Al-Qaida
11/04/04 To enjoin all banks and NBFIs to warn the public against text scam incidents which remain on the rise despite an earlier advisory issued by AMLC under Resolution No. 425 dated 11 October 2004
C. MEMORANDUM TO ALL BANKS AND OTHER FINANCIAL INTERMEDIARIES
DATE PARTICULARS
1/22/04 Revised general guidelines on the establishment of back-up operations centers (alternate crisis sites) and data recovery sites
1/26/04 To require universal banks and commercial banks applying for BSP recognition of their own internal Value-at-Risk (VaR) models in lieu of the standardized approach for calculating market risk capital charge 1) to conduct a self- assessment of its compliance with the requirements for the use of such models as prescribed under Circular 360 dated 3 December 2002 and 2) to submit a written application together with the required documents to the appropriate supervising and examination department
Source: Office of Supervisory Policy Development, Supervision and Examination Sector Page 12 of 16
Appendix 1
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
DATE PARTICULARS
1/26/04 To amend the guidelines for the implementation of the Subsidiary Ledger (SL) Reporting System of Universal and Commercial Banks as provided for under item 6 of Circular Letter dated 20 December 2000 pursuant to Circular No. 108 dated 9 May 1996
1/27/04 To defer further to 1 April 2004 the effectivity of implementation of Circular No. 392 dated 23 July, to wit: “To amend Subsection X235.5 (on delivery requirements of securities, warehouse receipts, quedans and other documents of title which are the subject of quasi-banking functions); to transfer and amend the provisions of Subsections X238.1 to X238.2 (on Sanctions to be imposed for violation of any provisions of Circular No. 392 dated 23 July 2003) and to provide new provisions under Subsection X238.1 of the MORB (on delivery requirements of securities sold on a without recourse basis allowed under Section X238)
1/27/04 To adjust/revise Schedule 2C of the Report on Compliance with the Mandatory Credit Allocation Required under R.A. No. 6977, as amended by R.A. No. 8289 so as to distinguish the amount of small and medium loans under SBGFC instruments which have been rediscounted and to be deducted from total holdings of SBGFC instruments in compliance with Sec. 2.b) of Circular No. 147 dated 24 October 1997
2/03/04 Revised report form for the computation of the Risk-Based Capital Adequacy Ratio Covering Credit Risks for Rural and Cooperative Banks and to be used for the quarter ending 31 March 2004 and thereafter
2/09/04 Guidelines governing electronic transmission of NBQB reports to BSP-SRSO
2/16/04 Revised accounting guidelines on the sale of non-performing assets (NPAs) to Special Purpose Vehicles (SPVs) and to qualified individuals for housing under “The Special Purpose Vehicle (SPV) Act of 2002”
2/20/04 To amend the guidelines for the implementation of the Subsidiary Ledger (SL) Reporting System of Thrift Banks as provided for under Item 8 of Circular Letter dated 9 July 2002 pursuant to Circular No. 270 dated 19 December 2000
3/02/04 The 10 percent liquidity reserve requirement as implemented under Circular No. 418 dated 5 February 2004 shall also apply to NBQBs
3/08/04 Guidelines for the implementation of the Subsidiary Ledger (SL) Reporting System of Thrift Banks as prescribed under item 4 of Circular No. 270 dated 19 December 2000, as amended by Circular Letter dated 9 July 2002
Source: Office of Supervisory Policy Development, Supervision and Examination Sector Page 13 of 16
Appendix 1
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
DATE PARTICULARS
3/24/04 The bank’s/NBQB’s reserve position on Deposit Substitutes, Deposit Liabilities, Common Trust Funds and Other Similarly Managed Funds (CTF) and Trust and Other Fiduciary Activities-Others (TOFA-Others) at the close of 6 April 2004 (Holy Tuesday) shall be carried over to 7 and 8 April 2004 of reserve week 2 to 8 April 2004, and which balance shall be forwarded to 9 to 11 April 2004 of the reserve week 9 to 15 April 2004
4/28/04 To remind all banks and NBQBs of the significant time lines relative to the implementation of R.A. No. 9182 (The Special Purpose Vehicle) Act of 2002:
a) Filing of applications with the SEC for the establishment and registration of an SPV not later than 18 September 2004; and
(b) Sale/Transfer of the following NPAs are entitled to tax exemptions and fee privileges up to 8 April 2005 only: (1) transfer of the NPL by the FI to an SPV, (2) transfer of the ROPOA by the FI to an SPV, (3) Dacion in payment (dacion en pago) of the NPL by the borrower to the FI, (4) Dacion in payment (dacion en pago) of the NPL by a third party, on behalf of the borrower, to the FI, (5) transfer of the NPL (secured by a real estate mortgage on a residential unit) by the FI to an individual and (6) transfer of the ROPOA (single family residential unit) by the FI to an individual
5/11/04 To require all banks to amend the Consolidated Report of Deposit Liabilities by Size of Account (Schedule C for KBs, Schedule 2D for TBs and Schedule 5 for RBs) of the monthly Consolidated Statement of Condition of Banks so as to effect the increase of insurance coverage of deposits to P250,000 effective for reports as of 30 June 2004
5/21/04 Guidelines for the implementation by end-December 2005 of the Unified General Ledger (GL)/Subsidiary Ledger (SL) Reporting System for rural/cooperative and microfinance-oriented rural banks
5/28/04 To suspend submission of the monthly status report on the extent of compliance with the GL/SL Reporting System of commercial banks effective for reports as of 31 May 2004
6/04/04 To consider favorably the inclusion of other regular benefits (such as 13th month pay and bonuses mandated under collective bargaining agreement) to the phrase, “twelve (12) months salary” cited in Section 4301S(a) of Circular No. 192 dated 5 March 1999 on Loan Limit to a Single Borrower
7/08/04 The revised templates for the Quarterly Report on Exposures to Real Estate Industry effective quarter-ended December 2004
Source: Office of Supervisory Policy Development, Supervision and Examination Sector Page 14 of 16
Appendix 1
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
DATE PARTICULARS
7/26/04 Checklist of BSP requirements in the submission of Audited Financial Statements and Annual Report conducted by external auditors to be submitted to the board of directors and the appropriate supervising and examining department of the BSP not later than ninety (90) calendar days after the start of such audit
8/05/04 To amend the guidelines for the issuance of unsecured subordinated debt (USD) so as to delete the quasi-banking authority requirement if USD will be issued to more than 19 investors
8/31/04 To consider 25 August 2004 (declared as a non-working half day for government employees) as a regular reserve day and 26 August 2004 (declared non-working day for government employees) as a non-reserve day for purposes of compliance with the reserve requirements
9/06/04 Prescribed data structures of the database files for the Report on Exposures to Real Estate Industry submitted every quarter as schedules for the Consolidated Statement of Condition (CSOC) of universal, commercial and thrift banks
9/08/04 Additional reportorial requirements on unsecured subordinated debt (USD) to be considered in the computation of loanable funds for purposes of determining compliance with the mandatory allocation of funds for agri-agra credit required under PD No. 717
9/09/04 To clarify to all concerned financial institutions the definition of “suspicious transactions” under the AMLA and its Revised Implementing Rules and Regulations
9/24/04 To include in the Schedule of Loan Portfolio and Other Accommodations (Schedule 2) of the monthly Consolidated Statement of Condition the Bangko Sentral ng Pilipinas as one of the borrowers of the interbank loan transactions effective for reports as of 31 October 2004, in compliance with the provision of Circular No. 386 dated 14 May 2003
10/12/04 To implement Section 8 of Circular No. 454 dated 24 September 2004 by amending the General Ledger Template Report and the Consolidated Statement of Condition of Universal, Commercial and Thrift Banks effective for reports as of 30 November 2004 so as to include general ledger accounts for credit card receivables (restructured loans, past due restructured loans and items in litigation - restructured loans)
10/25/04 Guidelines for calculating and reporting to the BSP the required reserves on deposit substitutes evidenced by repurchase agreements covering government securities
Source: Office of Supervisory Policy Development, Supervision and Examination Sector Page 15 of 16
Appendix 1
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
DATE PARTICULARS
12/01/04 To clarify issues on the requirements for accreditation of external auditors and other minimum operational requirements and standards banks must adhere to in implementing the internal credit risk rating systems (Circular No. 439 dated 5 July 2004)
12/10/04 To enjoin all banks and NBQBs to comply with the new requirements for the electronic submission of selected BSP reports
12/13/04 To inform all banks of the recently approved guidelines to implement the new international capital standards that was issued on 26 June 2004
12/29/04 To amend Item 1 of Circular No. 452 dated 22 September 2004 requiring all banks and NBFIs with trust license to comply with the legal and liquidity reserve requirements for outstanding common trust funds (CTF) and other similarly managed funds effective for reserve week starting 7 January 2005
Source: Office of Supervisory Policy Development, Supervision and Examination Sector Page 16 of 16
Appendix 2
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
DIRECTORY OF PHILIPPINE BANK HEAD OFFICES As of December 31, 2004
A. UNIVERSAL AND COMMERCIAL BANKS (U/KBs)
A.1 Universal Banks
Private Domestic Banks
1. Allied Banking Corporation - 6754 Ayala Ave. cor. Legaspi St., Makati City 2. Banco de Oro Universal Bank - 12 ADB Avenue, Ortigas Center, Mandaluyong City 3. Bank of the Philippine Islands - BPI Bldg., Ayala Avenue cor. Paseo de Roxas Makati City 4. China Banking Corporation - 8745 Paseo de Roxas cor. Villar St., Makati City 5. Equitable PCI Bank - Equitable PCIBank Tower I, Makati Ave., Makati City 6. Metropolitan Bank and Trust Company - Metrobank Plaza, Sen. Gil J. Puyat Ave., Makati City 7. Philippine National Bank - PNB Financial Center, D. Macapagal Blvd., Pasay City 8. Prudential Bank - Prudential Bank Bldg., 6787 Ayala Ave., Makati City 9. Rizal Commercial Banking Corporation - Yuchengco Tower, RCBC Plaza, 6819 Ayala Ave. Makati City 10. Security Bank Corporation - Security Bank Centre, 6776 Ayala Ave., Makati City 11. Union Bank of the Philippines - SSS (Makati) Bldg., Ayala Ave. cor. Herrera St. Makati City 12. United Coconut Planters Bank - UCPB Bldg., Makati Ave., Makati City
Government Banks
1. Al Amanah Islamic Inv't. Bank of the Philippines - G/F NDC Bldg., 116 Tordesillas St., Salcedo Village Makati City 2. Development Bank of the Philippines - DBP Bldg., Makati Ave., cor. Gil J. Puyat Ave., Makati City 3. Land Bank of the Philippines - LBP Plaza Bldg., 1598 M. H. del Pilar cor. J. Quintos Malate, Manila
Branches of Foreign Banks
1. ING Bank N.V. - Manila Branch - 21/F Tower One, Ayala Triangle Ayala Ave. cor. Paseo de Roxas, Makati City 2. Standard Chartered Bank - The Sky Plaza, 6788 Ayala Ave., Makati City 3. The Hongkong and Shanghai Banking Corp. Ltd. - The Enterprise Tower, 6766 Ayala Ave. cor. Paseo de Roxas, Makati City
A.2 Commercial Banks
Private Domestic Banks
1. Asia United Bank Corporation - G/F Parc Royal Bldg., Dona Julia Vargas Ave., Pasig City 2. Bank of Commerce - Philippine First, 6764 Ayala Ave., Makati City 3. BDO Private Bank, Inc. - 27/F Tower One and Exchange Plaza, Ayala Triangle Ayala Avenue cor. Paseo de Roxas, Makati City 4. East West Banking Corporation - 20/F PBCom Tower, 6795 Ayala Ave., cor. Herrera St. Makati City 5. Export & Industry Bank, Inc. - Chino Roces cor. Sen. Gil Puyat Ave., Makati City 6. International Exchange Bank - iBank Echange Bldg., 142 Amorsolo St., Legaspi Village Makati City 7. Philippine Bank of Communications - PBCom Tower, 6795 Ayala Ave. cor. V.A.Rufino St. Makati City 8. Philippine Trust Company - Philtrust Bldg., U.N. Ave., San Marcelino St., Ermita, Manila 9. Philippine Veterans Bank - PVB Bldg. 101 Herrera cor. dela Rosa St., Legaspi Village Makati City
Source : Supervisory Data Center, Supervision and Examination Sector Page 1 of 14 Appendix 2
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
Subsidiaries of Foreign Banks
1. ABN-Amro Bank, Inc. - 18/F LKG Tower, 6801 Ayala Ave., Makati City 2. Chinatrust (Phils.) Commercial Bank Corporation - 3/F Tower One, Ayala Triangle, Ayala Ave. cor. Paseo de Roxas, Makati City 3. Maybank Philippines, Inc. - Legaspi Towers 300, Roxas Blvd. cor. Vito Cruz Street Manila 4. United Overseas Bank Philippines - 17/F Pacific Star Bldg., Sen. Gil Puyat Ave. cor .Makati Ave., Makati City
Branches of Foreign Banks
1. ANZ Banking Group, Ltd. - Ist & 3rd. Flrs. Tower One, Ayala Triangle Ayala Ave. cor. Paseo de Roxas, Makati City 2. Bangkok Bank Public Company, Ltd. - 25/F BPI Bldg., Sen. Gil J. Puyat Ave., Makati City 3. Bank of America, NA - 27/F Philamlife Tower, 8767 Paseo de Roxas, Makati City 4. Citibank, N.A. (Phils.) - 8741 Paseo de Roxas St., Makati City 5. Deutsche Bank AG - 26/F Tower One, Ayala Triangle, Ayala Ave., Makati City 6. JP Morgan Chase Bank - 31/F Philamlife Tower, 8767 Paseo de Roxas (formerly The Chase Manhattan Bank, N.A.) Makati City 7. Korea Exchange Bank - 33/F Citibank Tower, 8741 Paseo de Roxas, Makati City 8. Mizuho Corporate Bank - Manila Branch - 26/F Citibank Tower, Valero St. cor. Villar St. Salcedo Village, Makati City 9. The Bank of China-Manila Branch - 36/F Philamlife Tower, 8767 Paseo de Roxas, Makati City 10. The Bank of Tokyo-Mitsubishi, Ltd. - 15/F The Sky Plaza Bldg., 6788 Ayala Ave., Makati City 11. The International Commercial Bank of China - 3rd/F, Pacific Star Bldg., Sen. Gil J. Puyat St. cor. Makati Ave., Makati City
B. THRIFT BANKS (TBs)
B.1 Subsidiaries/Affiliates of Other Banks/NBFIs
1. Allied Savings Bank - NDC Bldg., 116 Todesillas St., Salcedo Village, Makati City cor. Legaspi St., Legaspi Village, Makati City 2. American Express Bank Philippines ( A Savings Bank), Inc. - 29/F PBCom Tower, 6795 Ayala Ave. (formerly Omni Savings Bank Corporation) cor. V.A. Rufino St., Makati city 3. BPI Direct Savings Bank - BPI Paseo de Roxas Condominimum Center 8753 Paseo de Roxas, Makati City 4. BPI Family Savings Bank - BPI Family Bank Center Bldg. 109 Paseo de Roxas cor. dela Rosa St., Makati City 5. City Savings Bank - City Savings Financial Plaza cor. Osmena Blvd., Cebu City 6. EIB Savings Bank, Inc. - 14/F Ayala-FGU ctr., Mindanao Ave. cor. Biliran Rd., Cebu Business Park, Cebu City 7. Equitable Savings Bank, Inc. - G/F EBC Bldg., Ortigas Ave., cor. Roosevelt St. Greenhills, San Juan, Metro Manila 8. Far East Savings Bank, Inc. - 5/F BPI Bldg., Muralla cor. Solana St. Intramuros, Manila 9. HSBC Savings Bank (Philippines), Inc. - G/F Peninsula Court Bldg., 8735 Paseo de Roxas cor. (formely PCIB Savings Bank) Makati Ave., Makati City 10. Malayan Bank Savings and Mortgage Bank - Majalco Bldg., cor. Benavidez & Trasierra Sts. Legaspi Village, Makati City 11. Micro Enterprise Bank, a Thrift Bank - JLF Parkwell Bldg., Magallanes cor. Quirino St. Bankerohan, Davao City 12. Mindanao Development Bank - C. M. Recto Ave., Lapasan, Cagayan de Oro City 13. Philippine Savings Bank - 3/F PSBank Center, 777 Paseo de Roxas cor. Sedeno St., Makati City 14. Pilipinas Savings Bank, Inc. - G/F Medecor Bldg., Ortigas Ave., Greenhills San Juan, Metro Manila 15. Planters Development Bank - PlantersBank Bldg., 314 Gil Puyat Ext., Makati City 16. RCBC Savings Bank, Inc. - Pacific Place Bldg., Pearl Dr., Ortigas Center, Pasig City 17. Teachers Development Bank - JSS Bldg., Aguinaldo Hi-Way, Bayang Luma IV, Imus, Cavite 18. UCPB Savings Bank - UCPB Bldg., 153 Legaspi St., Legaspi Vill., Makati City
Source : Supervisory Data Center, Supervision and Examination Sector Page 2 of 14 Appendix 2
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
B.2 Non-Linked Thrift Banks
1. Accord Savings Bank, Inc. - ASBI Bldg., No. 8 Abanao Ext., Baguio City 2. Anchor Savings Bank - G/F Philasia Life, Champaca II Bldg., Alfaro St. Salcedo Village, Makati City 3. Area Development Bank, Inc. - Don Alejandro Camara Bldg., Sambali Center, Iba, Zambales 4. Asiatrust Development Bank - ATDB Bldg., 1424 Quezon Boulevard, Quezon City 5. Banco Filipino Savings and Mortgage Bank - 101 Paseo de Roxas cor. dela Rosa St., Makati City 6. Bank of Calape Savings and Mortgage Bank - Poblacion, Calape, 6328 Bohol 7. Bank One Savings and Trust Corporation - 4201 R. Magsaysay Blvd., Sta. Mesa, Manila 8. Bankwise, Inc. (A Thrift Bank) - Crown Prime Bldg., 828 A. S. Arnaiz Ave., Makati City 9. Bataan Development Bank - Aguirre St., Balanga. Bataan 10. Bataan Savings and Loan Bank, Inc. - 33 Rizal St., Dinalupihan, Bataan 11. Business and Consumers Bank (A Dev't. Bank) - Simon Ledesma St., Jaro, Iloilo City 12. Centennial Savings Bank, Inc. - G/F Prestige Tower, Emerald Ave., Ortigas Center Pasig City 13. Century Savings Bank - 232 Shaw Blvd. cor. Oranbo Drive, Pasig City 14. Citystate Savings Bank, Inc. - Citystate Center, 709 Shaw Blvd., Oranbo, Pasig City 15. Cordillera Savings Bank, Inc. - Dumlao Ave., Bayombong, Nueva Vizcaya 16. Dumaguete City Development Bank - Dr. Vicente Locsin cor. Cervantes St., Dumaguete City 17. Express Savings Bank, Inc. - J. P. Rizal St., Cabuyao, Laguna 18. Farmers Savings and Loan Bank, Inc. - McArthur Highway, Wakas, Bocaue, Bulacan 19. Filhome Savings and Loan Bank, Inc. - Liwag Bldg., Burgos Ave., Cabanatuan City 20. First Consolidated Bank (A Private Dev't. Bank) - Metro Center Bldg., C. P. Garcia Ave, North Avenue Tagbilaran City 21. GSIS Family Bank, A Thrift Bank - No. 7 Real St., Zapote, Las Pinas City, Metro Manila (formerly Comsavings Bank) 22. Hermosa Savings Bank - A. Nuguid St., Hermosa, Bataan 23. Hiyas Savings and Loan Bank - Sta. Maria Public Market Area, Poblacion, Sta. Maria, Bulacan 24. Iloilo City Development Bank - Cor. Rizal and Ortiz Sts., Iloilo City 25. Insular Life Savings and Trust Company - 6th & 7th Floors, Universal Reinsurance Bldg. 105 Paseo de Roxas, Makati City 26. Inter-Asia Development Bank - J.P. Rizal Ave. cor. Mahogany Market St. Tagaytay City 27. ISLA Bank (A Thrift Bank), Inc. - 131 dela Rosa St. cor. Esteban St., Legaspi Village Makati City 28. Keppel Bank Philippines, Inc. (A Thrift Bank) - Monte de Piedad St. cor. E. Rodriguez Ave., Cubao (formerly Keppel Monte Bank) Quezon City 29. LBC Development Bank - 809 J.P. Rizal cor. F. Zobel St., Makati City 30. Legazpi Savings and Loan Bank, Inc. - Bichara Silverscreen Entertainment Center Magallanes St., Legaspi City 31. Lemery Savings and Loan Bank - Ilustre Avenue, Lemery, Batangas 32. Liberty Savings and Loan Association, Inc. - Cor. Contreras St. and McArthur Highway, Calvario Meycauayan, Bulacan 33. Life Savings Bank, Inc. - Units 13-14 Marieta Arcade, Marcos Highway Cainta, Rizal 34. Luzon Development Bank - Paciano Rizal, Bo. Mayapa, Calamba, Laguna 35. Malasiqui Progressive Savings and Loan Bank, Inc. - Quezon Blvd. Ext., Malasiqui, Pangasinan 36. Maritime Savings Bank Corporation - E. Aguinaldo Highway, Bacoor, Cavite 37. Merchants Savings and Loan Association, Inc. - Merchants Bank Centre, 117 Tordesillas St., Salcedo Village, Makati City 38. Metro-Cebu Public Savings Bank - Tabunoc, Talisay, Cebu 39. Northpoint Development Bank - BR Bldg., National Road, Brgy. Lantayan, San Pedro, Laguna 40. Opportunity Micro Finance Bank - Unit RHC-1, B-1, L-53 Robinsons Home, East Comm'l Arcade Circumferential Rd., Antipolo City 41. Optimum Development Bank, Inc. - A. Bonifacio St., 2600 Baguio City 42. Orion Savings Bank, Inc. - G/F Chatham House, 116 Valero cor. Herrera St., Makati City 43. Pacific Ace Savings Bank (formerly Imperial Bank - Retail 1, Lot 6 Time Square Complex, Rizal Ave. (A Savings Bank) Subic Bay Freeport Zone, Olongapo City 44. Pampanga Development Bank - McArthur Highway, Dolores, San Fernando, Pampanga
Source : Supervisory Data Center, Supervision and Examination Sector Page 3 of 14 Appendix 2
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
45. Peñafrancia Savings and Loan Association, Inc. - San Roque, Iriga City 46. Philam Savings Bank - Paseo de Roxas cor Perea Sts., Legaspi Village Makati City 47. Philippine Business Bank, Inc. (A Thrift Bank) - Rizal Ave., cor. 2nd Ave., Grace Park, Kalookan City 48. Philippine Postal Savings Bank, Inc. - PostalBank Centre, Liwasang Bonifacio, Ermita, Mla. 49. Premiere Development Bank - EDSA cor. Magallanes Ave., Makati City 50. Progress Savings and Loan Association, Inc. - Poblacion, Subic, Zambales 51. Queen City Development Bank - Queenbank Financial Center, Mapa St., Iloilo City 52. Quezon Coconut Producers Savings & Loan Bank - Cor. Gov. Guinto & Enriquez Sts., Lucena City 53. Real Bank (A Thrift Bank), Inc. - 7th/F President Tower, Timog Ave., Diliman, Quezon City 54. Robinsons Savings Bank Corp. - Level 3 Expansion Mall, Robinsons Galleria, Edsa cor. Ortigas Ave., Quezon City 55. Sampaguita Savings and Loan Association, Inc. - No. 10 Juan Luna St., Poblacion, San Pedro, Laguna 56. Sandigan Savings Bank, Inc. - Cor Canlapan & T. Alonzo Sts., Malolos, Bulacan 57. San Pablo City Development Bank - 72 Crispin Calabia Ave., San Pablo City 58. Secured Savings and Loan Association, Inc. - Capt. Vicente Roa St., Cogon, Cagayan de Oro City 59. Silangan Savings and Loan Bank, Inc. - J. P. Rizal St., Silang, Cavite 60. The Bank of Cebu (A Development Bank) - The Bank of Cebu Bldg., 131 V. Gullas cor. Osmena Blvd., Cebu City 61. The Manila Banking Corporation (A Thrift Bank) - Manila Bank Bldg., 6772 Ayala Avenue, Makati City 62. The Palawan Bank (Palawan Development Bank), Inc. - 167 Rizal Ave., Puerto Princesa City, Palawan 63. Tower Development Bank - Rockavilla Bldg., Poblacion, Guiguinto, Bulacan 64. University Savings and Loan Association, Inc. - 1497 Dapitan cor. Alfredo St. Sampaloc, Manila 65. Village Savings and Loan Association, Inc. - Jolly Boy Food House, Centro I, Orani, Bataan 66. Vizcaya Savings and Loan Association, Inc. - Gen. Luna St., Solano, Nueva Vizcaya 67. Wealth Development Bank - Taft Financial Ctr., Cardinal Rosales Ave., (formerly Danao City Development Bank) Cebu Business Park, Cebu City 68. Winbank, Inc. (A Thrift Bank) - Banga, Plaridel, Bulacan 69. World Partners Bank-A Thrift Bank (formerly Bangko Kredito SMB, Inc.) - 72 Mabini St., Poblacion, San Pedro, Laguna
Source : Supervisory Data Center, Supervision and Examination Sector Page 4 of 14 Appendix 2
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
C. RURAL AND COOPERATIVE BANKS (RBs and Coop Banks)
NCR - Metro Manila La Union 1. AMA Bank (A Rural Bank) 1. Banawag Rural Bank, Inc. 2. Baclaran Rural Bank, Inc. 2. Community Rural Bank of San Gabriel, Inc. 3. Banco de Jesus Rural Bank 3. Cooperative Bank of La Union 4. Bangko Parañaque 4. LUDB Bank, Inc. (A RB) 5. Bangko Pasig (Rural Bank), Inc. 5. Rang-Ay Rural Bank, Inc. 6. BMS Rural Bank, Inc. 6. Rural Bank of Agoo, Inc. 7. Builders' Rural Bank 7. Rural Bank of Bacnotan, Inc. 8. Country Bank 8. Rural Bank of Bangar, Inc. 9. Filipino Savers Bank 9. Rural Bank of Bauang, Inc. 10. Finman Rural Bank, Inc. 10. Rural Bank of Caba, Inc. 11. First Country RB 11. Rural Bank of Luna (La Union), Inc. 12. First Macro Bank 12 Rural Bank of Naguilian (La Union), Inc. 13. Enterprise Capital Bank, Inc.(Taguig RB) 13. Rural Bank of Rosario (La Union), Inc. 14. Insular Rural Bank, Inc. 14. Rural Bank of Santol, Inc. 15. Marikina Valley Rural Bank, Inc. 15. Rural Bank of Sudipen, Inc. 16. Metro South Cooperative Bank 17. Rodriguez Rural Bank, Inc. Pangasinan 18. Rural Bank of Alabang (Muntinlupa), Inc. 1. Banco Rural de San Antonio 19. Rural Bank of Caloocan, Inc. 2. Bangko Pangasinan-A Rural Bank, Inc. 20. Rural Bank of Makati, Inc. 3. Bani Rural Bank, Inc. 21. Rural Bank of Malabon, Inc. 4. BHF Rural Bank, Inc. 22. Rural Bank of San Juan (MM), Inc. 5. Corfarm Rural Bank of Umingan (Pangasinan), Inc. 23. Rural Bank of Zapote, Inc. 6. CSF RB of Bayambang, Inc. 24. San Francisco del Monte Rural Bank, Inc. 7. Kaluyagan Rural Bank, Inc. 25. Second Rural Bank of Valenzuela, Inc. 8. Kaunlaran Rural Bank, Inc. 26. Smart Bank (RB), Inc. 9. Pangasinan Bank ( A RB), Inc. 27. The Center Rural Bank, Inc. 10 People's Rural Bank of Binmaley, Inc. 11. Rural Bank of Agno, Inc. 12. Rural Bank of Alaminos (Pangasinan), Inc. Region I - Ilocos 13. Rural Bank of Anda, Inc. 14. Rural Bank of Balungao, Inc. Ilocos Norte 15. Rural Bank of Bautista, Inc. 1. Community Rural Bank of Dingras, Inc. 16. Rural Bank of Bayambang, Inc. 2. Cooperative Rural Bank of Ilocos Norte, Inc. 17. Rural Bank of Bolinao, Inc. 3. Ilocandia Community Bank 18. Rural Bank of Burgos (Pangasinan), Inc. 4. Rural Bank of Batac, Inc. 19. Rural Bank of Calasiao, Inc. 5. Rural Bank of Sarrat, Inc. 20. Rural Bank of Central Pangasinan, Inc. 21. Rural Bank of Dasol, Inc. Ilocos Sur 22. Rural Bank of Labrador, Inc. 1. Cordillera Bank, Inc. (An RB)-formerly Ilocos Sur DB 23. Rural Bank of Laoac (Pangasinan), Inc. 2. Ilocos Sur Cooperative Bank 24. Rural Bank of Lingayen, Inc. 3. Rural Bank of Banayoyo, Inc. 25. Rural Bank of Malasiqui, Inc. 4. Rural Bank of Burgos (Ilocos Sur), Inc. 26. Rural Bank of Mangaldan, Inc. 5. Rural Bank of Cabugao, Inc. 27. Rural Bank of Mapandan, Inc. 6. Rural Bank of Galimuyod, Inc. 28. Rural Bank of Pozorrubio, Inc. 7. Rural Bank of Magsingal, Inc. 29. Rural Bank of Rosales, Inc. 8. Rural Bank of Sadiri (San Juan), Inc. 30. Rural Bank of San Fabian, Inc. 9. Rural Bank of Salcedo, Inc. 31. Rural Bank of San Nicolas (Pangasinan), Inc. 10. Rural Bank of Sta. Maria (Ilocos Sur), Inc. 32. Rural Bank of San Quintin, Inc. 11. Rural Bank of Tagudin, Inc. 33. Rural Bank of Sta. Barbara (Pangasinan), Inc. 12. Vigan Banco Rural Incorporada 34. Rural Bank of Sual, Inc. 35. Second Rural Bank of Basista (Pangasinan) 36. Urduja Rural Bank of Tayug, Inc.
Source : Supervisory Data Center, Supervision and Examination Sector Page 5 of 14 Appendix 2
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
Region II - Cagayan Valley
Cagayan Bataan (cont'n) 1. Cooperative Rural Bank of Cagayan, Inc. 5. Rural Bank of Bagac, Inc. 2. Providence Bank 6. Rural Bank of Hermosa, Inc. 3. Rural Bank of Claveria, Inc. 7. Rural Bank of Limay, Inc. 4. Rural Bank of Faire, Inc. 8. Rural Bank of Pilar (Bataan), Inc. 5. Rural Bank of Gattaran, Inc. 6. Rural Bank of Sanchez Mira, Inc. Bulacan 1. Agricom Rural Bank (Sta. Maria, Bulacan), Inc. Isabela 2. Apex Rural Bank, Inc. 1. Consolidated Rural Bank of Cagayan Valley 3. Baliuag Rural Bank, Inc. 2. First Isabela Cooperative Rural Bank, Inc. 4. Bangko Rural ng Kalumpit (Bulacan), Inc. 3. Golden RB of the Phils. 5. Cooperative Rural Bank of Bulacan, Inc. 4. Mallig Plains Rural Bank (Isabela), Inc. 6. East Coast RB of Hagonoy, Inc. 5. Philippine Rural Banking Corporation 7. Emerald Rural Bank, Inc. 6. Rural Bank of Alicia (Isabela), Inc. 8. Fil-Agro Rural Bank 7. Rural Bank of Angadanan, Inc. 9. Gateway Rural Bank, Inc. 8. Rural Bank of Benito Soliven 10. Rural Bank of 21st Century (Balagtas), Inc. 9. Rural Bank of Cauayan (Isabela), Inc. 11. Rural Bank of Angat, Inc. 10. Rural Bank of Luna (Isabela), Inc. 12. Rural Bank of Bustos, Inc. 11. Rural Bank of Magsaysay (Isabela), Inc. 13. Rural Bank of Doña R. Trinidad, Inc. 12. Rural Bank of Ramon, Inc. 14. Rural Bank of Malolos, Inc. 13. Rural Bank of Reina Mercedes, Inc. 15. Rural Bank of Norzagaray, Inc. 14. Rural Bank of San Agustin, Inc. 16. Rural Bank of Pandi, Inc. 15. Rural Bank of San Manuel (Isabela), Inc. 17. Rural Bank of Plaridel (Bulacan), Inc. 16. Rural Bank of San Mateo (Isabela), Inc. 18. Rural Bank of San Ildefonso, Inc. 17. Rural Bank of Tumauini, Inc. 19. Rural Bank of San Jose del Monte, Inc. 18. United Consumers Rural Bank, Inc. 20. Rural Bank of San Pascual (Bulacan), Inc. 21. Rural Bank of San Rafael (Bulacan), Inc. Nueva Vizcaya 22. Second Rural Bank of Meycauayan, Inc. 1. Agri-Business Rural Bank 23. Silahis Bank ( a Rural Bank) 2. Samahang Nayon Cooperative RB of Nueva Vizcaya, Inc. 24. Sta. Maria Rural Bank (Bulacan), Inc. 3. Rural Bank of Aritao, Inc. 4. Rural Bank of Bagabag, Inc. Nueva Ecija 5. Rural Bank of Bambang, Inc. 1. Aliaga Farmers Rural Bank (NE), Inc. 6. Rural Bank of Bayombong, Inc. 2. Banco Rural de General Tinio, Inc. 7. Rural Bank of Dupax, Inc. 3. Bangko Luzon (A Rural Bank), Inc. 8. Rural Bank of Solano, Inc. 4. Cabanatuan City Rural Bank, Inc. 9. Rural Bank of Villaverde, Inc. 5. Citizens' Rural Bank (Cabiao), Inc. 6. Cooperative Rural Bank of Nueva Ecija, Inc. Quirino 7. Cuyapo Rural Bank, Inc. 1. Rural Bank of Maddela, Inc. 8. GM Bank, Inc. (A Rural Bank) 9. Kabalikat Rural Bank, Inc. Region III - Central Luzon 10. Masagana Rural Bank, Inc. 11. Merchant Rural Bank of Talavera, Inc. Aurora 12. Millennium Bank, Inc.-A Rural Bank (Formerly part of Region IV (Southern Tagalog) but transferred to 13. New Rural Bank of San Leonardo (NE), Inc. Region III after the division of Region IV per Executive Order 14. Producers' Rural Bank of San Jose City (NE), Inc. No. 103 dated 17 May 2002) 15. Rural Bank of Gabaldon, Inc. 16. Rural Bank of Guimba (NE), Inc. 1. Cooperative Bank of Aurora 17. Rural Bank of Jaen, Inc. 2. Rural Bank of Baler, Inc. 18. Rural Bank of Laur, Inc. 3. Rural Bank of Casiguran, Inc. 19. Rural Bank of Lupao, Inc. 4. Rural Bank of Maria Aurora, Inc. 20. Rural Bank of Quezon (Nueva Ecija), Inc. 21. Rural Bank of Sta. Rosa (Nueva Ecija), Inc. Bataan 22. Rural Bank of Sto. Domingo (Nueva Ecija), Inc. 1. Balanga Rural Bank, Inc. 23. Rural Bank of Talugtog, Inc. 2. Bataan Cooperative Bank 24. SME Bank 3. Orani Rural Bank, Inc. 25. Towncall Rural Bank 4. Rural Bank of Abucay, Inc.
Source : Supervisory Data Center, Supervision and Examination Sector Page 6 of 14 Appendix 2
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
Pampanga Batangas (cont'n.) 1. Bank of Florida 13. First Coconut Rural Bank, Inc. 2. Bangko Nuestra Senora del Pilar 14. Limcoma Rural Bank, Inc. 3. Cooperative Rural Bank of Pampanga, Inc. 15. Lipa Bank, Inc. (A Rural Bank) 4. Crown Bank, Inc. ( a RB) 16. Lipa Public Bank (A RB) 5. Guagua Rural Bank, Inc. 17. Malarayat Rural Bank, Inc. 6. Guagua Savers Bank (a RB), Inc. 18. Mt. Makiling Rural Bank, Inc. 7. Rural Bank of Angeles, Inc. 19. New Rural Bank of Agoncillo 8. Rural Bank of Apalit, Inc. 20. Pres. Jose P. Laurel Rural Bank (Tanauan), Inc. 9. Rural Bank of Bacolor, Inc. 21. Progressive Rural Bank, Inc. 10. Rural Bank of Lubao, Inc. 22. Rural Bank of Alitagtag, Inc. 11. Rural Bank of Mabalacat, Inc. 23. Rural Bank of Batangas, Inc. 12. Rural Bank of Masantol, Inc. 24. Rural Bank of Calaca, Inc. 13. Rural Bank of Mexico, Inc. 25. Dynamic Bank (RB of Calatagan, Inc.) 14. Rural Bank of Porac, Inc. 26. Rural Bank of Cuenca, Inc. 15. Rural Bank of San Luis (Pampanga), Inc. 27. Rural Bank of Lemery (Batangas), Inc. 16. Rural Bank of Sasmuan, Inc. 28. Rural Bank of Lipa City, Inc. 17. Rural Bank of Sta. Rita, Inc. 29. Rural Bank of Lobo, Inc. 18. San Bartolome Rural Bank, Inc. 30. Rural Bank of Mabini (Batangas), Inc. 19. San Fernando Rural Bank (Pampanga), Inc. 31. Rural Bank of Mataas Na Kahoy, Inc. 20. Saviour Rural Bank 32. Rural Bank of Nasugbu, Inc. 21. Unity Bank ( a RB), Inc. 33. Rural Bank of Padre Garcia, Inc. 22. 2nd Rural Bank of San Luis (Pampanga), Inc. 34. Rural Bank of San Jose (Batangas), Inc. 35. Rural Bank of San Luis (Batangas), Inc. Tarlac 36. Rural Bank of San Nicolas (Batangas), Inc. 1. Camiling Rural Bank, Inc. 37. Rural Bank of Sto Tomas (Batangas), Inc. 2. Cooperative Rural Bank of Tarlac, Inc. 38. Rural Bank of Taal, Inc. 3. First Provincial Bank, Inc. (A Rural Bank) 39. Rural Bank of Talisay (Batangas), Inc. 4. Rural Bank of Bamban, Inc. 40. Rural Bank of Taysan, Inc. 5. Rural Bank of La Paz (Tarlac), Inc. 41. Sto. Rosario Rural Bank, Inc. 6. Rural Bank of Pura, Inc. 42. Summit Rural Bank of Lipa City 7. Rural Bank of Sta. Ignacia, Inc. 43. Sunrise Rural Bank (Rosario, Batangas), Inc. 8. Rural Bank of Sta. Rosa de Lima 44. Synergy Rural Bank, Inc. 9. Rural Bank of Tarlac, Inc. 45. Utility Bank (A RB), Inc. 10. Rural Bank of Victoria (Tarlac), Inc. 46. Women's Rural Bank, Inc. 11. St. Michael Rural Bank
Zambales 1. Community Rural Bank of San Felipe, Inc. Cavite 2. Cooperative Bank of Zambales, Inc. 1. Advance Bank, Inc. (RB) 3. Countryside Rural Bank of Palauig, (Zambales), Inc. 2. Bangko Mabuhay (RB of Tanza, Inc.) 4. Maharlika Rural Bank of Sta. Cruz (Zambales), Inc. 3. Capitol City Rural Bank of Trece Martires 5. Rural Bank of Cabangan, Inc. 4. Cavite Rural Banking Corp. 6. Rural Bank of Candelaria (Zambales), Inc. 5. Cebuana Lhuiller Rural Bank, Inc. 7. Rural Bank of San Antonio (Zambales), Inc. 6. Central Equity Rural Bank, Inc. 8. Rural Bank of San Marcelino, Inc. 7. Community Bank (RB of Alfonso Inc.) 9. Rural Bank of San Narciso (Zambales), Inc. 8. Cooperative Bank of Cavite 10. Zambales Rural Bank, Inc. 9. First Reliance Bank (RB of Indang, Inc.) 10 GMA Rural Bank of Cavite, Inc. Region IV - A (CALABARZON) 11. Imus Rural Bank Inc. (Formerly part of Region IV (Southern Tagalog) before it was divided 12. Masuwerte Rural Bank of Bacoor, Inc. into Region IV-A (Calabarzon) and Region IV-B (Mimaropa) per 13. Rural Bank of Amadeo (Cavite), Inc. Executive Order No. 103 dated 17 May 2002 14. Rural Bank of Carmona, Inc. 15. Rural Bank of Cavite City, Inc. Batangas 16. Rural Bank of Dasmariñas, Inc. 1. 5 Speed Rural Bank, Inc. 17. Rural Bank of General Aguinaldo, Inc. 2. Balayan Bay Rural Bank, Inc. 18. Rural Bank of General Trias, Inc. 3. Banco Batangan Inc. (A RB) 19. Rural Bank of Kawit, Inc. 4. Banco ng Masa (a Micro-Finance Oriented RB) 20. Rural Bank of Maragondon, Inc. 5. Bangko Kabayan 21. Rural Bank of Mendez, Inc. 6. Batangas Rural Bank for Cooperative, Inc. 22. Rural Bank of Naic, Inc. 7. Bolbok Rural Bank, Inc. 23. Rural Bank of Salinas, Inc. 8. Classic Rural Bank, Inc. 24. Rural Bank of Silang, Inc. 9. Countryside Cooperative RB of Batangas, Inc. 25. Rural Bank of Sto Niño (Ternate), Inc. 10. Empire Rural Bank, Inc. 26. Rural Bank of Tagaytay City, Inc. 11. Excel Rural Bank, Inc. 27. Unlad Rural Bank of Noveleta, Inc. 12. Farmers Rural Bank, Inc.
Source : Supervisory Data Center, Supervision and Examination Sector Page 7 of 14 Appendix 2
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
Laguna Rizal 1. Biñan Rural Bank, Inc. 1. Binangonan Rural Bank, Inc. 2. CARD Rural Bank, Inc. 2. Eastern Rizal (Jala-jala) Rural Bank, Inc. 3. De La O Rural Bank, Inc. 3. Filidian Rural Bank of Antipolo 4. Entrepreneur RB (RB of Unisan, Inc.) 4. Growers Rural Bank 5. First United Farmers Bank 5. Rizal Rural Bank (Taytay) 6. Key Rural Bank (San Pedro), Inc. 6. Rural Bank of Angono, Inc. 7. La Consolacion Rural Bank, Inc. 7. Rural Bank of Antipolo, Inc. 8. ORMON BANK (RB of Mulanay, Inc.) 8. Rural Bank of Cainta, Inc. 9. PLANBANK-RB of Canlubang Planters, Inc. 9. Rural Bank of Cardona, Inc. 10. Provident Rural Bank of Sta. Cruz, Inc. 10 Rural Bank of Montalban, Inc. 11. Rural Bank of Alaminos (Laguna), Inc. 11. Rural Bank of Pililia, Inc. 12. Rural Bank of Bay, Inc. 12. Rural Bank of San Mateo (Rizal), Inc. 13. Rural Bank of Cabuyao, Inc. 13. Rural Bank of St. Joseph (Baras), Inc. 14. Rural Bank of Calamba, Inc. 14. Rural Bank of Teresa, Inc. 15. Rural Bank of Calauan, Inc. 15. Tanay Rural Bank, Inc. 16. Rural Bank of Cavinti, Inc. 17. Rural Bank of Lilio, Inc. Region IV - B (MIMAROPA) 18. Rural Bank of Luisiana, Inc. (Formerly part of Region IV (Southern Tagalog) before it was divided 19. Rural Bank of Lumban, Inc. into Region IV-A (Calabarzon) and Region IV-B (Mimaropa) per 20. Rural Bank of Mabitac, Inc. Executive Order No. 103 dated 17 May 2002)) 21. Rural Bank of Magdalena, Inc. 22. Rural Bank of Majayjay, Inc. Marinduque 23. Rural Bank of Marilag (Sta Maria, Laguna, Inc.) 1. Rural Bank of Sta. Cruz (Marinduque), Inc. 24. Rural Bank of Nagcarlan, Inc. 25. Rural Bank of Paete, Inc. Mindoro Occidental 26. Rural Bank of Pagsanjan, Inc. 1. Occidental Mindoro Cooperative Bank, Inc. 27. Rural Bank of Pangil, Inc. 2. Rural Bank of Lubang, Inc. 28. Rural Bank of Rizal (Laguna), Inc. 3. Rural Bank of Rizal (Occidental Mindoro), Inc. 29. Rural Bank of San Antonio de Padua (Pila), Inc. 4. Tamaraw Rural Bank, Inc. 30. Rural Bank of San Lorenzo Ruiz (Siniloan) 31. Rural Bank of Seven Lakes, Inc. Mindoro Oriental 32. Rural Bank of Sta. Rosa (Laguna), Inc. 1. Oriental Tamaraw Rural Bank of Naujan 33. Turumba Rural Bank of Pakil Laguna, Inc. 2. Rural Bank of Baco, Inc. 34. Unilink Bank (A RB), Inc. 3. Rural Bank of Bansud, Inc. 4. Rural Bank of Calapan, Inc. Quezon 5. Rural Bank of Gloria, Inc. 1. Cooperative Bank of Quezon Province 6. Rural Bank of Mansalay, Inc. 2. Grand Agri Rural Bank, Inc. 7. Rural Bank of Pinamalayan, Inc. 3. Mega Rural Bank, Inc. 8. Rural Bank of Pola, Inc. 4. Polillo Islands Rural Bank, Inc. 9. Rural Bank of Puerto Galera, Inc. 5. Quezon Capital Rural Bank, Inc. 10. Rural Bank of Roxas (Oriental Mindoro), Inc. 6. Quezon Traders Rural Bank, Inc. 11. Rural Bank of Socorro, Inc. 7. Rural Bank of Alabat, Inc. 12. Rural Bank of Victoria (Oriental Mindoro), Inc. 8. Rural Bank of Atimonan, Inc. 13. The Country Bank-RB of Bongabon (Or. Mindoro) 9. Rural Bank of Candelaria (Quezon), Inc. 10. Rural Bank of Dolores (Quezon), Inc. Palawan 11. Rural Bank of General Luna, Inc. 1. Cooperative Bank of Palawan 12. Rural Bank of Infanta (Quezon), Inc. 2. Rural Bank of Brooke's Point, Inc. 13. Rural Bank of Lucban, Inc. 3. Rural Bank of Cuyo, Inc. 14. Rural Bank of Mauban, Inc. 4. Rural Bank of Narra, Inc. 15. Rural Bank of Pagbilao, Inc. 16. Rural Bank of Pitogo, Inc. Romblon 17. Rural Bank of Sampaloc, Inc. 1. Community Rural Bank of Romblon, Inc. 18. Rural Bank of San Antonio (Quezon), Inc. 2. Rural Bank of Cajidiocan, Inc. 19. Rural Bank of Sariaya, Inc. 3. Rural Bank of Odiongan, Inc. 20. Rural Bank of Tagkawayan, Inc. 4. Rural Bank of San Fernando (Romblon), Inc. 21. Rural Bank of Tayabas, Inc. 5. Rural Bank of Sta. Fe (Romblon), Inc. 22. Tiaong Rural Bank, Inc. 23. United Peoples' Rural Bank, Inc. 24. Universal Rural Bank of Lopez
Source : Supervisory Data Center, Supervision and Examination Sector Page 8 of 14 Appendix 2
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
Region V - Bicol Region VI - Western Visayas
Albay Aklan 1. Cagsawa Rural Bank, Inc. 1. Cooperative Rural Bank of Aklan, Inc. 2. Ibalon Rural Bank (Tabaco, Albay), Inc. 2. Rural Bank of Altavas, Inc. 3. Rural Bank of Camalig, Inc. 3. Rural Bank of Balete, Inc. 4. Rural Bank of Guinobatan, Inc. 4. Rural Bank of Banga (Aklan), Inc. 5. Banco Legaspi (RB of Legaspi, Inc.) 5. Rural Bank of Batan, Inc. 6. Rural Bank of Libon, Inc. 6. Rural Bank of Ibajay, Inc. 7. Rural Bank of Malilipot, Inc. 7. Rural Bank of Makato, Inc. 8. Rural Bank of Malinao (Albay), Inc. 8. Rural Bank of Malinao (Aklan), Inc. 9. Rural Bank of Oas, Inc. 9. Rural Bank of Nabas, Inc. 10. Rural Bank of Polangui, Inc. 10. Rural Bank of New Washington, Inc. 11. Rural Bank of Santiago de Libon, Inc. 11. Rural Bank of Numancia, Inc. 12. The BDD, A Rural Bank 12. Rural Bank of Tangalan, Inc.
Antique Camarines Norte 1. Rural Bank of Bugasong, Inc. 1. Cooperative Bank of Camarines Norte 2. Rural Bank of Hamtic, Inc. 2. Rural Bank of Capalonga, Inc. 3. Rural Bank of Sebaste, Inc. 3. Rural Bank of Jose Panganiban, Inc. 4. Rural Bank of Sibalom, Inc. 4. Rural Bank of Paracale, Inc. 5. Rural Bank of Tibiao, Inc. 5. Rural Bank of San Vicente, Inc. 6. Rural Bank of Sta. Elena, Inc. 7. Rural Bank of Vinzons, Inc. Capiz 1. Capiz Settlers Cooperative Rural Bank, Inc. Camarines Sur 2. Farmers' Bank of Capiz, Inc. 1. Bangko Rural ng Magarao (Cam Sur), Inc. 3. President Roxas Rural Bank (Capiz), Inc. 2. Bangko Rural ng Pasacao 4. Rural Bank of Cuartero, Inc. 3. Cooperative Bank of Camarines Sur 5. Rural Bank of Dao, Inc. 4. First Naga Bank ( A Rural Bank) 6. Rural Bank of Ivisan, Inc. 5. G-7 Bank, Inc (RB of Nabua) 7. Rural Bank of Jamindan, Inc. 6. Municipal Rural Bank of Del Gallego, Inc. 8. Rural Bank of Mambusao, Inc. 7. Municipal Rural Bank of Libmanan, Inc. 9. Rural Bank of Panay, Inc. 8. Municipal Rural Bank of Nabua, Inc. 10. Rural Bank of Pilar (Capiz), Inc. 9. Peñafrancia Rural Bank of Calabanga 11. Rural Bank of Sapian, Inc. 10. Rural Bank of Camaligan, Inc. 11. Rural Bank of Gainza, Inc. Guimaras 12. Rural Bank of Goa, Inc. 1. Rural Bank of Buenavista (Guimaras Island), Inc. 13. Rural Bank of Lagonoy, Inc. 2. Rural Bank of Jordan, Inc. 14. Rural Bank of Milaor, Inc. 15. Rural Bank of Nueva Caceres, Inc. Iloilo 16. Rural Bank of Ocampo, Inc. 1. Cooperative Rural Bank of Iloilo, Inc. 17. Rural Bank of Pamplona (Camarines Sur), Inc. 2. Farmers-Traders Rural Bank, Inc. 18. Rural Bank of Ragay, Inc. 3. First Midland Rural Bank 19. Rural Bank of San Fernando (Camarines Sur) 4. Janiuay Rural Bank, Inc. 20. Rural Bank of San Jose (Camarines Sur), Inc. 5. Life Bank (RB of Maaisim) 21. Rural Bank of Sipocot, Inc. 6. Rural Bank of Alimodian, Inc. 22. Rural Bank of Tigaon, Inc. 7. Rural Bank of Anilao, Inc. 8. Rural Bank of Badiangan, Inc. Catanduanes 9. Rural Bank of Balasan, Inc. 1. Vision Bank, Inc.-A Rural Bank (MF) 10. Rural Bank of Barotac Nuevo, Inc. 11. Rural Bank of Barotac Viejo, Inc. Masbate 12. Rural Bank of Bingawan, Inc. 1. Rural Bank of Milagros, Inc. 13. Rural Bank of Cabatuan (Iloilo), Inc. 2. Rural Bank of San Jacinto (Masbate), Inc. 14. Rural Bank of Calinog, Inc. 15. Rural Bank of Dumangas, Inc. Sorsogon 16. Rural Bank of Guimbal, Inc. 1. Rural Bank of Donsol, Inc. 17. Rural Bank of Iloilo City, Inc. 2. Rural Bank of Irosin, Inc. 18. Rural Bank of Leganes, Inc. 3. Rural Bank of Pilar (Sorsogon), Inc. 19. Rural Bank of Miagao, Inc. 4. Rural Bank of Sta. Magdalena, Inc. 20. Rural Bank of Oton, Inc. 5. Sorsogon Provincial Coop Bank 6. Sorsogon Rural Bank, Inc.
Source : Supervisory Data Center, Supervision and Examination Sector Page 9 of 14 Appendix 2
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
Iloilo (cont'n.) Cebu (cont'n.) 21. Rural Bank of Pavia, Inc. 26. Rural Bank of Pinamungahan, Inc. 22. Rural Bank of Pototan, Inc. 27. Rural Bank of San Fernando (Cebu), Inc. 23. Rural Bank of San Enrique (Iloilo), Inc. 28. Rural Bank of Subangdaku, Inc. 24. Rural Bank of San Joaquin, Inc. 29. Rural Bank of Talisay (Cebu), Inc. 25. Rural Bank of San Miguel (Iloilo), Inc. 30. Rural Bank of Toledo City, Inc. 26. Rural Bank of Sta. Barbara (Iloilo), Inc. 31. Sugbuanon Rural Bank, Inc. 27. Rural Bank of Tigbuan, Inc. 32. Upland Rural Bank of Dalaguete 28. Rural Bank of Zarraga, Inc. 29. Valiant Rural Bank (Iloilo City), Inc. Negros Oriental 1. Central Visayas RB, Inc. Negros Occidental 2. Cooperative Bank of Negros Oriental 1. Community Rural Bank of Magallon, Inc. 3. Dumaguete Rural Bank, Inc. 2. First Community Bank, Inc. (A Rural Bank) 4. Rural Bank of Amlan, Inc. 3. First State Rural Bank 5. Rural Bank of Ayungon, Inc. 4. Nation Bank, Inc. (A Rural Bank) 6. Rural Bank of Bacong 5. New Rural Bank of Binalbagan, Inc. 7. Rural Bank of Bais, Inc. 6. Rural Bank of Bacolod City, Inc. 8. Rural Bank of Basay, Inc. 7. Rural Bank of Cadiz, Inc. 9. Rural Bank of Bayawan, Inc. 8. Rural Bank of Escalante, Inc. 10. Rural Bank of Guihulngan, Inc. 9. Rural Bank of Himamaylan, Inc. 11. Rural Bank of Mabinay, Inc. 10. Rural Bank of Hinigaran, Inc. 12. Rural Bank of Manjuyod, Inc. 11. Rural Bank of Ilog, Inc. 13. Rural Bank of Pamplona (Negros Oriental), Inc. 12. Rural Bank of Ma-ao, Inc. 14. Rural Bank of Siaton, Inc. 13. Rural Bank of Manapla, Inc. 15. Rural Bank of Sibulan, Inc. 14. Rural Bank of Marayo, Inc. 16. Rural Bank of Sta. Catalina (Negros Oriental), Inc. 15. Rural Bank of Sagay (Negros Occidental), Inc. 17. Rural Bank of Tanjay, Inc. 16. Rural Bank of Silay City, Inc. 18. Rural Bank of Valencia (Negros Oriental), Inc. 17. Rural Bank of Talisay (Negros Occidental), Inc. 19. Rural Bank of Zamboangita, Inc. 18. Rural Bank of Victorias, Inc.
Region VII - Central Visayas Siquijor 1. Rural Bank of Larena, Inc. Bohol 1. Cooperative Rural Bank of Bohol, Inc. Region VIII - Eastern Visayas 2. Rural Bank of Calape, Inc. 3. Rural Bank of Garcia-Hernandez, Inc. Biliran 4. Rural Bank of Loon, Inc. 1. Rural Bank of Naval, Inc. 5. Rural Bank of Maribojoc, Inc. Eastern Samar Cebu 1. Rural Bank of Borongan, Inc. 1. ASPAC Rural Bank 2. Rural Bank of Guiuan, Inc. 2. Banco Maximo, Inc. (A Rural Bank) 3. Rural Bank of Taft, Inc. 3. Banco Rural de Isla Cordova (Cebu) 4. Banco Rural de Visayas Leyte 5. Cardinal Rural Bank 1. Leyte Cooperative Rural Bank, Inc. 6. Coastal Bank, Inc. (a Rural Bank) 2. Rural Bank of Albuera, Inc. 7. Community Rural Bank of Catmon, Inc. 3. Rural Bank of Bato (Leyte), Inc. 8. Community Rural Bank of Medellin, Inc. 4. Rural Bank of Burauen, Inc. 9. Cooperative Bank of Cebu 5. Rural Bank of Calubian, Inc. 10. First Agro-Industrial Rural Bank, Inc. 6. Rural Bank of Dulag, Inc. 11. Frontier Rural Bank 7. Rural Bank of Hilongos, Inc. 12. Lapu-Lapu Rural Bank, Inc. 8. Rural Bank of Hindang, Inc. 13. Mactan Rural Bank (Lapu-Lapu City) 9. Rural Bank of Javier, Inc. 14. National Teachers and Employees Coop. Bank (NTECB) 10. Rural Bank of Kananga, Inc. 15. Philippine Countryside Rural Bank, Inc. 11. Rural Bank of Mahaplag, Inc. 16. Pilipino Rural Bank, Inc. 12. Rural Bank of Matag-ob, Inc. 17. Plaza Rural Bank, Inc. 13. Rural Bank of Ormoc City, Inc. 18. Rural Bank of Bantayan, Inc. 19. Rural Bank of Barili, Inc. Northern Samar 20. Rural Bank of Bogo, Inc. 1. Rural Bank of Catubig, Inc. 21. Rural Bank of Carmen (Cebu), Inc. 22. Rural Bank of Cebu South (Sibonga), Inc. Western Samar 23. Rural Bank of Madridejos, Inc. 1. Rural Bank of Basey, Inc. 24. Rural Bank of Mandawe, Inc. 2. Rural Bank of Calbayog City, Inc. 25. Rural Bank of Oslob, Inc. 3. Rural Bank of Gandara, Inc.
Source : Supervisory Data Center, Supervision and Examination Sector Page 10 of 14 Appendix 2
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
Southern Leyte Misamis Occidental (cont'n.) 1. Community Rural Bank of Maasin, Inc. 6. Rural Bank of Oroquieta, Inc. 2. Rural Bank of Hinundayan, Inc. 7. Rural Bank of Ozamis City, Inc. 3. Rural Bank of Malitbog, Inc. 8. Rural Bank of Pana-on, Inc. 4. Rural Bank of Padre Burgos (Southern Leyte), Inc. 9. Rural Bank of Plaridel (Misamis Occidental), Inc. 5. Rural Bank of San Juan (Southern Leyte), Inc. 10. Rural Bank of Sapang Dalaga, Inc. 6. Southern Leyte Cooperative Bank 11. Rural Bank of Sinacaban, Inc. 12. Rural Bank of Tangub, Inc. Region IX - Zamboanga Peninsula 13. Rural Bank of Tudela, Inc. (Formerly Western Mindanao) Misamis Oriental Zamboanga del Norte 1. Bangko Rural ng Tagoloan 1. Community Rural Bank of Dapitan City 2. Community Rural Bank of Naawan, Inc. 2. Rural Bank of Dipolog, Inc. 3. Cooperative Rural Bank of Misamis Oriental, Inc. 3. Rural Bank of Katipunan (Zamboanga del Norte) 4. Philippine Farmers Bank 4. Rural Bank of Labason, Inc. 5. Rural Bank of Balingasag, Inc. 5. Rural Bank of Liloy, Inc. 6. Rural Bank of El Salvador, Inc. 6. Rural Bank of Manukan, Inc. 7. Rural Bank of Gingoog, Inc. 7. Rural Bank of Pres. Manuel A. Roxas 8. Rural Bank of Gitagum, Inc. 8. Rural Bank of Rizal (Zamboanga del Norte) 9. Rural Bank of Initao, Inc. 9. Rural Bank of Salug, Inc. 10. Rural Bank of Kinogitan, inc. 10. Rural Bank of Siocon, Inc. 11. Rural Bank of Medina, Inc. 11. Zamboanga del Norte Cooperative Bank 12. Rural Bank of Talisayan, Inc. 13. SIAM Bank Zamboanga del Sur 14. Society Rural Bank 1. Cooperative Bank of Zamboanga del Sur 15. South Bank (A Rural Bank) 2. Rural Bank of Pagadian, Inc. 16. UCPB Rural Bank, Inc. 3. Salug Valley Rural Bank, Inc. 17. Xavier-Tibod Bank (A Micro-Finance Rural Bank) 4. Zamboanga City Rural Bank, Inc. Region XI - Davao Region Zamboanga Sibugay (Formerly Southern Mindanao) 1. Rural Bank of Kabasalan, Inc. Compostela Valley Region X - Northern Mindanao 1. Money Mall Rural Bank, Inc. 2. Rural Bank of Compostela (Davao del Norte) Bukidnon 3. Rural Bank of Mawab, Inc. 1. Asian Hills Bank 4. Rural Bank of Montevista, Inc. 2. Cooperative Rural Bank of Bukidnon, Inc. 5. Rural Bank of Nabunturan, Inc. 3. Malaybalay Rural Bank, Inc. 4. Rural Bank of Kalilangan, Inc. Davao del Norte 5. Rural Bank of Kibawe, Inc. 1. Century Rural Bank (Rural Bank of Babak, Inc.) 6. Rural Bank of Manolo Fortich, Inc. 2. Rural Bank of Carmen (Davao del Norte), Inc. 7. Rural Bank of Valencia (Bukidnon), Inc. 3. Rural Bank of Kapalong, Inc. 8. Xavier-Punla Rural Bank, Inc. 4. Rural Bank of New Corella, Inc. 5. Rural Bank of Sto. Tomas (Davao del Norte) Camiguin 6. Rural Bank of Tagum, Inc. 1. Camiguin Cooperative Rural Bank, Inc. 2. Community Rural Bank of Mambajao, Inc. 3. Philippine Intercity Rural Bank, Inc. Davao del Sur 1. Community Rural Bank of Magsaysay, Inc. Lanao del Norte 2. Cooperative Rural Bank of Davao del Sur, Inc. (Formerly part of Region XII) 3. First Bay Area Bank (A Rural Bank) 1. Cooperative Rural Bank of Lanao del Norte, Inc. 4. One Network Rural Bank, Inc. 2. Rural Bank of Iligan City, Inc. 5. Rural Bank of Digos, Inc. 3. Rural Bank of Kapatagan Valley, Inc. 6. Rural Bank of Hagonoy (Davao del Sur), Inc. 4. Rural Bank of Karomatan, Inc. 7. Rural Bank of Matanao, Inc. 5. Rural Bank of Kolambugan, Inc. 6. Rural Bank of Maigo, Inc. Davao Oriental 1. Rural Bank of Baganga, Inc. Misamis Occidental 2. Rural Bank of Lupon, Inc. 1. Community Rural Bank of Clarin, Inc. 3. Rural Bank of Mati, Inc. 2. Panguil Bay Rural Bank, Inc. 3. Rural Bank of Bonifacio, Inc. 4. Rural Bank of Jimenez, Inc. 5. Rural Bank of Lopez Jaena, Inc.
Source : Supervisory Data Center, Supervision and Examination Sector Page 11 of 14 Appendix 2
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
Region XII - SOCOSKSARGEN XIV. Autonomous Region in Muslim (Formerly Central Mindanao) Mindanao (ARMM)
North Cotabato Lanao del Sur 1. Cooperative Rural Bank of North Cotabato, Inc. 1. Bagong Bangko Rural ng Malabang 2. Partner Rural Bank (Cotabato), Inc. 2. Maranao Rural Bank 3. Rural Bank of Cotabato, Inc 4. Rural Bank of Midsayap, Inc. Maguindanao 5. Rural Bank of M'lang, Inc. 1. Rural Bank of Datu Paglas, Inc. 6. Rural Bank of President Roxas (N. Cotabato), Inc. 2. Rural Bank of Parang (Maguindanao), Inc.
XV. CARAGA Sarangani (Created into a region under R.A. No. 7901 dated 23 February 1995, (Formerly part of Region X1) formerly part of Region X and Region X1) 1. Rural Bank of Alabel 2. Rural Bank of Kiamba, Inc. Agusan del Norte 3. Rural Bank DARBCI (Formerly part of Region X before the creation of CARAGA) 1. Agusan Norte-Butuan City Cooperative Rural Bank South Cotabato 2. Butuan City Rural Bank, Inc. (Formerly part of Region X1) 3. Rural Bank of Buenavista (Agusan del Norte) 1. Peninsula Rural Bank 4. Rural Bank of Cabadbaran, Inc. 2. People's RB (Gen. Santos City), Inc. 5. Rural Green Bank of Caraga 3. Rural Bank of Koronadal, Inc. 4. Rural Bank of Norala, Inc. Agusan del Sur 5. Rural Bank of Polomolok, Inc. (Formerly part of Region X before the creation of CARAGA) 6. Rural Bank of Sarangani, Inc. 1. Cooperative Bank of Agusan del Sur 7. Rural Bank of Tampakan (South Cotabato), Inc. 2. Peoples Bank of Caraga
Sultan Kudarat Surigao del Norte (Formerly part of Region XI) (Formerly part of Region X before the creation of CARAGA) 1. Rural Bank of Isulan, Inc. 1. Rural Bank of Dapa, Inc. 2. Rural Bank of Lebak, Inc. 2. Rural Bank of Gigaquit, Inc. 3. Rural Bank of Lambayong, Inc. 3. Rural Bank of Loreto, Inc. 4. Rural Bank of President Quirino (Sultan Kudarat), Inc. 4. Rural Bank of Placer, Inc. 5. Rural Bank of Tacurong, Inc. 5. Surigao City Evergreen Rural Bank, Inc. 6 Surigaonon Rural Banking Corp. XIII. Cordillera Administrative Region (CAR) Surigao del Sur Abra (Formerly part of Region XI before the creation of CARAGA) 1. Rural Bank of Bangued, Inc. 1. Bangko Carrascal, Inc. (A RB) 2. Rural Bank of Bucay, Inc. 2. Cooperative Bank of Surigao del Sur 3. Rural Bank of Villaviciosa, Inc. 3. Enterprise Bank 4. Rural Bank of Cantilan, Inc. Apayao 5. Rural Bank of Lanuza, Inc. 1. Rural Bank of Luna (Kalinga-Apayao), Inc. 6 Rural Bank of Tandag, Inc.
Benguet 1. Benguet Center Bank, Inc-A Rural Bank 2. Cooperative Bank of Benguet 3. Diamond Rural Bank, Inc. 4. Rural Bank of Baguio, Inc. 5. Rural Bank of Buguias, Inc. 6. Rural Bank of Itogon, Inc. 7. Highland Rural Bank 8. Rural Bank of La Trinidad, Inc. 9. Summit Bank
Ifugao 1. Lagawe Highlands RB
Kalinga 1. Rural Bank of Rizal (Kalinga), Inc. 2. Rural Bank of Tabuk, Inc.
Mountain Province 1. Cooperative Bank of Mt. Province 2. Rural Bank of Bontoc, Inc. 3. Rural Bank of Sagada, Inc.
Source : Supervisory Data Center, Supervision and Examination Sector Page 12 of 14 Appendix 2
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
DIRECTORY OF NON-BANK FINANCIAL INSTITUTIONS WITH QUASI-BANKING FUNCTIONS As of December 31, 2004
A. INVESTMENT HOUSES (IHs)
1 . A B Capital and Investment Corporation - 3rd/F Asian Plaza Bldg I, G. Puyat Ave. Makati City 2 . BPI Capital Corporation - BPI Bldg., 109 Ayala Ave. cor. Paseo de Roxas Makati City 3 . First Metro Investment Corporation - 21/F. Metrobank Plaza, Gil Puyat Ave., Makati City 4 . Multinational Investment Bancorporation - 9/F, Prudential Bank Bldg., Ayala Ave., Makati City 5 . RCBC Capital Corporation - Alfaro cor. Gallardo St., Salcedo, Makati City 6 . State Investment Trust, Inc. - 333 Juan Luna Street, Binondo, Manila
B. FINANCING COMPANIES (FCs)
1 . BPI Card Finance Corporation - 379 Sen. Gil Puyat Ave., Makati City 2 . BPI Leasing Corporation - 9/F, BPI Bldg., Ayala Ave., Makati City 3 . Cebu International Finance Corporation - 8/F, CIFC Towers, J. Luna Avenue cor. Humabon St., Cebu City 4 . First Malayan Leasing and Finance Corporation - 5/F Grepalife Bldg., 221 Sen. Gil Puyat Ave. Makati City 5 . Penta Capital Finance Corporation - 10/F, ACT Tower Condominium Sen. Gil Puyat Ave., Makati City
C. OTHER NON-BANKS WITH QBF 1 . Philippine Depository and Trust Company - G/F MSE Bldg., 6767 Ayala Ave., Makati City
Source : Supervisory Data Center, Supervision and Examination Sector Page 13 of 14 Appendix 2
STATUS REPORT ON THE PHILIPPINE FINANCIAL SYSTEM, SECOND SEMESTER 2004
DIRECTORY OF OFFSHORE BANKING UNITS OPERATING IN THE PHILIPPINES As of December 31, 2004
1. ABN-AMRO, N.V. - 18/F LKG Tower 6801 Ayala Avenue Makati City 2. American Express Bank, Limited - 11/F, 6750 Ayala Avenue, Makati City 3. BNP Paribas - 30/F Philam 8767 Paseo de Roxas, Makati City 4. Calyon Corporate and Investment Bank - 14/F, Pacific Star Building, Makati Ave. cor. Gil J. Puyat Ave., Makati City 5. J. P. Morgan Int'l. Finance Ltd. - 31/F Philam 8767 Paseo de Roxas, Makati City (formerly Chase Manhattan International Finance, Ltd.) 6. KBC Bank, N.V. - 38/F Philam 8767 Paseo de Roxas, Makati City
7. Societe Generale - 21/F, Antel Corporate Center, 139 Valero St. Salcedo Village, Makati City 8. Taiwan Cooperative Bank - 26/F, Citibank Tower, 8741 Paseo de Roxas Makati City 9. Union Bank of California, NA. - 8/F, ACE Building cor. Rada & dela Rosa Sts. Legaspi Village, Makati City
Source : Supervisory Data Center, Supervision and Examination Sector Page 14 of 14