MANILA, Philippines (Xinhua) – Capitalization of Philippine universal and commercial banks (U/KBs) improved at the end of June 2013, the local central bank said today.
The Philippine central bank said the combined capital adequacy ratio (CAR) of the country’s U/KBs reached nearly double the minimum amount prescribed by regulators.
At the end of June, Philippine banks’ capital adequacy ratio ( CAR) stood at 17.98 percent on solo basis and 19.24 percent on consolidated basis.
These ratios are better than the 17.75 percent CAR on a solo basis and 18.89 percent on a consolidated basis for Philippine banks recorded in March 2013.
“These high ratios are still driven by the industry’s Tier 1 capital, the highest quality among instruments eligible as bank capital,” the central bank said in a statement.
CAR serves as the buffer of Philippine banks for potential losses from risky assets. Higher CAR levels are an indication of the health of the banking sector.
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Up until the end of 2013, U/KBs are required to maintain a CAR of at least 10 percent.
Starting this month, Philippine banks must maintain higher CAR levels as part of reforms under the Basel III accord.
