The country’s stand-alone thrift banks and rural and cooperative banks (RCBs) were more than adequately capitalized in the fourth quarter of 2014, with their capital position for the period exceeding the 10 percent minimum regulatory ratio.
“This indicates banks’ continued efforts to set aside sufficient buffer against unexpected losses that may arise in times of stress,” the Bangko Sentral ng Pilipinas (BSP) said in a statement.
Stand-alone banks are those not affiliated with universal or commercial banks.
The central bank noted that these small banks passed the capitalization requirements under the more stringent international guidelines of Basel 1.5 framework, a simplified version of Basel II in view of the simple operations of stand-alone banks..
The BSP said the stand-alone TBs’ capital adequacy ratio (CAR) at end-December 2014 stood at 22.31 percent, while the CAR of of stand-alone RCBs was at 18.17 percent.
The BSP said the CAR of stand-alone TBs of 22.31 percent improved by 4.24 percentage points from the 18.07 percent registered at end-December 2013. The improvement was traced to the significant decline in risk weighted assets (RWAs) of P26.7 billion coupled with an P800 million increase in capital.
“The decrease in RWA was primarily driven by the merger/acquisition of two large TBs by universal banks whereas the increase in capital was on account of robust net profits and additional capital infusion of a number of TBs,” the central bank said.
On the other hand, the overall CAR of stand-alone RCBs of 18.17 percent marginally slipped by less than one percentage point from 19.15 percent at end-December 2013, attributable to the faster growth rate of RWAs versus that of total qualifying capital, it said.
“Under the broader banking reform agenda, the Bangko Sentral ng Pilipinas continues to monitor the capital position of banks against their risk-taking activities. This is essential to fostering financial stability, which is a key policy objective of the BSP,” it added.