Landbank says it remains stable, regulatory compliant amid Maharlika infusion

State-run Land Bank of the Philippines said Friday its financial muscle remains strong and stable following its infusion of capital into the country's very first sovereign wealth fund under the Maharlika Investment Corp. (MIC).

In a statement, Landbank said it reaffirms its financial strength and stability following its P50-billion contribution to the Maharlika Investment Fund (MIF) as it “remains fully committed to its mandate as a reliable partner to the national government’s inclusive development agenda.”

The state-owned lender issued the statement after the International Monetary Fund (IMF) flagged its, along with Development Bank of the Philippines (DBP), capital infusions —totaling P75 billion— to bankroll the MIF. h

In its report, the IMF urged the government to implement capital restoration plans for the two state-run banks to exit regulatory relief “as soon as possible” following their capital injections to the sovereign wealth fund.

Under the Bangko Sentral ng Pilipinas’ (BSP) regulations, universal banks are required to have a minimum capitalization of P3 billion to P20 billion, depending on the number of branches. LandBank then had an authorized capital stock of P200 billion, while DBP had P35 billion.

With this, Landbank said that it “has consistently met and exceeded the minimum requirements of the BSP for Capital Adequacy Ratio (CAR)—a critical benchmark of financial health—as it stays financially robust with no urgent need for additional capital.”

As of November 30, 2024, the state-run lender said its CAR remains at a “healthy level” of 16.42% —well above the 10% regulatory threshold.

The Landbank said its CAR demonstrates its “resilience against financial and operational risks.”

The bank noted that following its P50-billion infusion for the seed capital of the MIF in September 2023, its CAR stood at 16.20% —“remaining comfortably above regulatory requirements and reflecting the bank’s commitment to financial stability.”

It added that the regulatory relief was sought from the BSP as a proactive measure to maintain resilience.

To recall, LandBank and DBP sought regulatory relief from the BSP in 2023, as their respective capital infusions into the MIF could render them non-compliant with central bank regulations.

Landbank said that it has consistently adhered to prudent financial management practices, effectively utilizing its resources to promote agriculture, fisheries and rural development, and empower key development sectors.

“Earlier this year, the bank remitted P32.119 billion in cash dividends to the National Government—the highest among all Government Owned and Controlled Corporations (GOCCs) and in the Bank’s history,” it said.

“This milestone reflects the bank's sustained financial strength and ability to generate consistent revenues while fulfilling its developmental mandate,” it added.—AOL, GMA Integrated News