Capital adequacy ratio of RP banks dips in June

MANILA, Philippines - The capital adequacy ratio (CAR) of Philippine banks dipped as of end-June but the Bangko Sentral ng Pilipinas (BSP) said the indicator remained at healthy levels. Central bank data released on Monday showed that the consolidated CAR of banks as of June 30 stood at 15.25 percent, lower than the 15.49 percent recorded as of end-March. Despite the lower end-June figure, the industry's CAR remained above the BSP's minimum requirement of ten percent. It is also higher than the adequacy ratio of eight percent prescribed by the Basel Accord, an international agreement on banking regulations. The BSP attributed the banking system's lower CAR to adjustments made by banks in allocating capital charges for operational risks and certain assets. The consolidated CAR of the universal and banking industry as of end-June slipped 0.19 percentage points to 15.47 percent. "The decline resulted from a P140.9 billion hike in RWA (risk-weighted assets) supported by only a P15.5 billion growth in capital," the BSP said. The thrift banking industry likewise posted lower CAR at 14.50 percent in June from 15.16 percent in March. "The CAR of the industry tapered as a result of the P1.7 billion decrease in the capital level, from P46.9 billion to P45.2 billion quarter on quarter, coupled with the P2.5 billion increase in RWA, from P309.3 billion to P311.8 billion during the same period," the central bank said. Rural banks and cooperative banks also posted a decline in CAR to 13.52 percent as of end-June from 13.67 percent as of end-March also as the growth in capital lagged against the increase of allocation for risk-weighted assets. - GMANews.TV