For decades, investors judged Philippine banks using a familiar checklist: loan growth, non-performing loans, quarterly earnings, and dividend payouts.
By those metrics, the industry’s largest institutions appear to be in excellent health. Profits remain robust, credit quality has steadily improved since the pandemic, and capital ratios comfortably exceed regulatory minimums.
Yet, Vantage Point’s own reconstruction of the country’s largest banks suggests investors have been watching only half the balance sheet.
The next important measure of banking strength is not hiding in bad loans. It is hiding in government bonds.
Rising interest rates have quietly erased billions of pesos from shareholder equity as the market value of government securities declined.
