The capital adequacy ratios (CAR) of big banks under the more stringent Basel III Framework slipped in the third quarter of 2015 from a year earlier, the central bank reported over the weekend.
The CAR of universal and commercial banks (U/KBs) slipped to 15.55 percent as of end-September 2015 from the 16.32 percent recorded in the same period last year.
Combined with their subsidiaries and quasi-banks, the equivalent CAR of U/KBs in the Philippines stood at 16.40 percent as of end-September 2015, lower than the previous year’s 16.99 percent.
Despite the decline, the latest CAR figures were above the Bangko Sentral ng Pilipinas’ regulatory threshold of 10 percent and the international minimum of 8 percent.
Compared with the quarter earlier, the CAR as of end-September improved from their solo ratio of 15.48 but eased slightly from their consolidated ratio of 16.42 percent.
The sector’s CAR is measured according to the regulations of the Basel III regime, which took effect on January 1, 2014.
“The industry’s capitalization remains predominantly composed of Common Equity Tier 1 (CET 1), the highest quality among instruments eligible as bank capital,” the central bank said.
The CET 1 of U/KBs represented 12.99 percent and 13.92 percent of risk-weighted assets (RWA) on solo and consolidated bases as of end September.
Tier 1 ratios stood at 13.18 percent and 14.08 percent on solo and consolidated bases, respectively, during the period. Tier 1 is composed of common equity and qualified capital instruments.
Both CET 1 and Tier 1 ratios of big banks were also above the BSP thresholds of 6.0 percent and 7.5 percent, respectively.
“Said capital ratios increased amid the U/KBs’ profitable operations and issuance of new shares as well as the infusion of foreign bank capital,” it said.