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Monday, March 4, 2024

Landbank remains well capitalized after infusing P50 billion into Maharlika fund

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Land Bank of the Philippines (LandBank) said it remains strong and well capitalized after contributing P50 billion in seed capital to the Maharlika Investment Corp. that will manage the Maharlika Investment Fund.

“Even with the bank’s P50-billion seed capital to the MIC as mandated by Republic Act No. 11954, otherwise known as the Maharlika Investment Fund Act of 2023, the bank will meet its CAR [capital adequacy ratio] requirements,” it said in a statement.

It said it remained compliant with regulatory requirements of the Bangko Sentral and Pilipinas (BSP).

LandBank said that as of end-June 2023, its total assets reached P3 trillion or 7.9 percent higher than P2.8 trillion in the same period last year, while net income amounted to P20.9 billion from loans and investments earnings, exceeding its first-half target by 19 percent or P3.3 billion.

The bank also booked double-digit capital growth at 14.4 percent to P236.3 billion from P206.5 billion in 2022.

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Meanwhile, outstanding loans to agriculture and rural development was at P713.8 billion, representing 69 percent of its total loan portfolio of P1.04 trillion, almost three times the 25 percent requirement for local banks to allocate financing for agriculture, fisheries and rural development (AFRD) under Republic Act No. 11901 or “The Agriculture, Fisheries and Rural Development Financing Enhancement Act of 2022.”

The bank said its capital adequacy ratio (CAR) remained at a very healthy level of 16.61 percent as of June 2023, above the 10 percent minimum requirement of the BSP, while its Common Equity Tier 1 (CET 1) ratio stands at 15.73 percent also compliant with the 10.25 percent CET 1 requirement.

The BSP tracks the CAR and Common Equity Tier 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.

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.

The BSP said last week Land Bank and Development Bank of the Philippines (DBP) sought regulatory relief after they remitted their contributions to the Maharlika Investment Corp.

MIC has an initial capitalization of P125 billion. LandBank and DBP already transferred their contributions, as the founding government financial institutions, of P50 billion and P25 billion, respectively to the account of the Bureau of the Treasury.

LandBank deposited its share on Sept. 14, while DBP remitted its share on Sept. 15.

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