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November 24, 2003 |
International research publication The Asian Banker ranked DBP as the strongest bank in the country, besting bigger local counterparts.
The Asian Banker is a major intelligence company in the region which provides analysis on the financial services industry. It recently released The Asian Banker 300, a comprehensive ranking of top 300 banks in the region by size and strength.
In a statement, The Asian Banker said DBP placed 296th, or four places from the bottom of the list in terms of assets among 300 banks in the region. Based on the alternative scoring method, however, DBP outperformed other industry strongholds like Metropolitan Bank and Trust Co. and Bank of the Philippine Islands despite its relatively smaller size.
According to the survey, Philippine banks listed in the poll “appear to have registered a considerably good overall return on equity of 5%” against a negative 2.5% posted by all top 300 banks in the region.
Instead of ranking banks by asset size, The Asian Banker developed an alternative ranking methodology for Asia’s strongest bank by considering financial and operational parameters, asset quality, and improvements in profits and assets against the previous year.
The Asian Banker used what it calls a “dynamic scoring methodology” which considers the following criteria: return on assets (ROA) or a look at the bank after it makes additional loan loss provisions; the capital adequacy ratio (CAR) or a measurement of the bank’s health by comparing the percentage of qualifying capital to total risk-weighted exposures.
Operating cost-to-income ratio (CIR), which is a division of operating expenses into operating income, was also considered. Other factors considered were the operating cost-to-assets ratio, which illustrates operating efficiency; and non-performing loans (NPLs)
Based on this scoring method, DBP scored 23 out of a maximum 35 despite its small size among the country’s strongest banks. In the region, DBP ranked 73.
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