Banks remain well capitalized in Q1, says Bangko Sentral

Philippine banks registered sufficient capital as buffer against lending risks as of the first quarter, Bangko Sentral ng Pilipinas said Wednesday. 
 
In a statement, the central bank said universal and commercial banks reflected a stand-alone capital adequacy ratio (CAR) of 17.75 percent as of end-March, and of 18.89 percent for the consolidated ratio that included those of subsidiaries and affiliates
 
Both measures were above the 10-percent minimum set by the central bank and the 8 percent by the Bank for International Settlements, which sets worldwide standards.
 
CAR is a measure of solvency or the ability of a business to pay its liabilities. It gauges the capacity of banks to absorb risks by comparing their qualifying capital against
risk-weighted assets (RWAs) such as loans granted and securities issued.
 
The ratios as of end-March 2013 was slightly above the 17.28 percent individual and 18.35 percent consolidated CAR recorded as of end-2012. 
 
Bangko Sentral noted a faster capital increase among banks compared with RWAs helped improve the quarter-on-quarter ratio.
 
 
Qualifying capital grew by 3.63 percent on solo basis and 4.10 on consolidated basis. 
 
This was “due to hefty net profits posted during the first quarter and additional issuances of common stocks,” the Bangko Sentral statement read. 
 
RWAs, meanwhile, inched up by 0.85 percent on solo basis and 1.15 percent in consolidated terms. 
 
The central bank said the latest figures show the industry’s “continued efforts to maintain robust capitalization. 
 
“A strong capital position promotes financial stability by providing individual banks and the industry with an adequate buffer against unexpected losses that may arise during times of stress,” it added. – Siegfrid Alegado/VS, GMA News