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THE solvency of Philippine banks slipped by end-2006,
according to the Bangko Sentral ng Pilipinas (BSP).
In a statement, the BSP said the
banking system’s capital adequacy ratio (CAR) ended last year at
18.13 percent, or lower than the 18.63 percent at end-September.
The CAR represents the share of
banks’ capital to their risk-weighted total assets, and is a
measure of their solvency.
The BSP requires banks to
maintain a CAR of at least 10 percent both on a solo basis and on a
consolidated basis. Consolidated basis includes parent bank and its
subsidiary financial undertakings, excluding insurance units. The
ratio covers credit risk and combined credit and market risks for
universal and commercial banks.
“The slight decline in CAR of
the banking system resulted from the faster growth in risk-weighted
assets relative to the increase in the system’s total qualifying
capital,” the BSP said.
Risk weighted assets grew 6.57
percent to P2.575 trillion on solo basis and 6.36 percent to P2.785
trillion on a consolidated basis.
--Maricel E. Burgonio
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