THE Land Bank of the Philippines (LBP) said its capitalization as of the first half remains more than adequate to cover its financial risks despite contributing to the country’s Maharlika Investment Corp. (MIC).
The state-run lender said its Capital Adequacy Ratio (CAR) at end-June stood at 16.61 percent, “well above” the 10-percent minimum requirement of the Bangko Sentral ng Pilipinas.
The LBP added its Common Equity Tier 1 (CET 1) ratio is at 15.73 percent, “compliant” with the BSP’s 10.25-percent CET 1 requirement.
“The BSP tracks the Capital Adequacy Ratio (CAR) and Common Equity Tier 1 (CET 1) ratio of banks to ensure that they are capable of absorbing a reasonable amount of financial risks and still comply with statutory capital levels,” it said in a statement on Sunday.
“Both capital ratios are essential as it indicates a bank’s financial strength and how well it can weather financial challenges. A higher CAR means a bank is more financially stable and secure,” it added.
The LBP pointed out that it will still be able to hit its CAR requirement even with its contribution to the MIC.
“Even with the bank’s P50-billion seed capital to the MIC as mandated by Republic Act 11954, otherwise known as the Maharlika Investment Fund Act of 2023, the bank will meet its CAR requirement,” the lender said.
The LBP said its total assets, as of end-June, rose by P200 billion to P3 trillion from P2.8 trillion last year.
Meanwhile, the bank’s net income hit P20.9 billion, exceeding its first half target by P3.3 billion.
The LBP added it has also booked double-digit capital growth at 14.4 percent to P236.3 billion from P206.5 billion in 2022.
The lender emphasized that its outstanding loans to agriculture and rural development has reached P713.8 billion, about 69 percent of its total loan portfolio of P1.04 trillion.
The LBP noted that its outstanding loans to agriculture and rural development are nearly three times the 25-percent required allocation for local banks for agriculture, fisheries and rural development financing.
The lender issued the statement a few days after President Ferdinand R. Marcos Jr. issued Executive Order (EO) 43 that adjusted the LBP’s dividend rate. The EO reduced the LBP’s dividends for 2022 to the national government to zero percent from 50 percent of its annual net income.
“The adjusted dividend rate set forth in Section 1 of this Order is applicable only to the [LBP] for CY 2022,” the EO read.