• Universal, commercial banks still well capitalized

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    The Bangko Sentral ng Pilipinas (BSP) on Monday announced that end-2012 capital adequacy ratio (CAR) of universal and commercial banks (U/KBs) remain well capitalized and was recorded at 17.28 percent.

    It said that that when consolidated with their subsidiary banks and quasi-banks, U/KBs registered a CAR of 18.35 percent at end-December 2012.

    The central bank added that the industry’s Tier 1 capital is still robust at 15.22 percent of U/KBs risk-weighted assets (RWAs) at the end of last year.

    “On consolidated basis, their Tier 1 ratio was 15.44 percent during the said period,” it stated.

    The BSP continued that December CAR values are slightly lower than those in September, because RWAs are increasing at a faster pace than qualifying capital.

    “The increase in the industry’s RWA was brought about by a rise in lending to corporations and in investments in foreign currency debt securities issued by the national government and the Bangko Sentral ng Pilipinas,” it emphasized.

    The central bank also noted that, the industry’s RWAs also increased by 4.97 percent on solo and 4.93 percent on consolidated bases.

    Furthermore, it reported tha, the rise in RWAs was accompanied by a slight increase in qualifying capital of 1.02 percent and 1.32 percent on solo and consolidated bases during the period, driven by retained earnings as U/KBs posted healthy net profits at end-2012.

    “The increase in qualifying capital was moderated by the redemption of some banks of debt securities classified as Tier 2. This was likely response to the implementation of the new capital standards under Basel 3 on January 1, 2014 which derecognized certain debt securities as qualifying capital,” the BSP stated.

    It further explained that, CAR figures indicate that U/KBs continue to be mindful of the importance of setting aside sufficient capital.

    “A robust CAR position supports financial stability because it provides individuals banks and the industry with an adequate buffer against risks and unexpected losses,” the BSP added.

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