MikeLigalig.com

The Philippines’ banking sector again proved its strength in the first quarter this year after exceeding minimum requirement of both the Bangko Sentral ng Pilipinas (BSP) and the Basel Accord.

The BSP requires banks to have at least 10 percent capital adequacy ratio (CAR), a measure of bank’s solvency, while Basel Accord’s requirement is eight percent.

The BSP, in a report Wednesday, said the industry’s CAR as of end-March this year further rose to 14.9 percent on solo basis and 15.95 percent on consolidated basis.

“Similarly, Tier 1 (T1) capital ratios of 12.41 percent on a solo basis and 12.56 percent on a consolidated basis remained significantly high as T1 capital continued to comprise the major component of qualifying capital,” it said.

The central bank said the industry’s capitalization was boosted by the faster expansion of qualifying capital over risk weighted assets (RWA).

This, after qualifying capital rose quarter-by-quarter by 0.55 percent or P3.41 billion on solo basis and 1.62 percent or P11.09 billion on consolidated basis.

These figures are better than the 0.19 percent or P7.98 billion rise on solo basis of RWA and by 0.52 percent or P22.5 billion on consolidated basis “mainly due to increase in operational RWA during the quarter.”

In particular, universal and commercial banks’ (U/KBs) CAR remained strong although unchanged compared to end-December 2009 at 14.99 percent.

“Minimal movement in qualifying capital and RWA levels influenced the industry’s steady CAR for the period,” the BSP said.

However, it went up by 0.16 percentage points to 16.17 percent from 16.01 percent on consolidated basis during the same period due mainly to the “1.50 percent growth in qualifying capital, which surpassed the 0.52 percent increment in RWA.”

Thrift banks’ (TBs) CAR in the first quarter this year grew quarter-on-quarter by 0.19 percentage points to 12.25 percent both on solo and consolidated bases. “

“The strengthening of the TB industry’s CAR was on account of the 2.32 percent uptick in qualifying capital that far outpaced the 0.71 percent expansion in RWA,” the BSP said.

Also, CAR of the rural, cooperative (RB/Coop) banks jumped by 1.06 percentage points to 18.83 percent as of end-March this year.

The BSP said among the three groups, the RBs registered the fastest growth of 19.11 percent as against the 16.06 percent of coop banks.

The RB’s CAR increased by 1.15 percentage points quarter-on-quarter while it is 0.22 percentage point.

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