PNB undertakes portfolio review

MANILA, Philippines — Lucio Tan-led Philippine National Bank (PNB) is undertaking a portfolio review to reduce its loan exposure to vulnerable sectors amid the coronavirus disease 2019 or COVID-19 pandemic.

PNB president and chief executive officer Jose Arnulfo Veloso told stockholders the bank is conducting the portfolio review to assess both industry-wide vulnerability and individual account resilience.

“In order to mitigate the risk in the past portfolio, we will reduce exposures, some of them have already been reduced in vulnerable sectors and strengthen security positions,” Veloso said.

Veloso said the bank is helping borrowers through restructuring and is extending more loans to essential sectors of the economy after Luzon was placed under enhanced community quarantine on March 16.

“The bank has less than 10 percent exposure in this vulnerable segments. Just like any other lender during this kind of period, we continue to have dialogue with our borrowers to make sure that the risks we have with them are also mitigated and the loans are serviced,” Veloso said.

The lockdown in Luzon, including the National Capital Region (NCR), was relaxed through a shift to the general community quarantine.

“And for those that we can restructure, we will, and more emphasis is given on returns over risk weighted assets, rather simple assets. We will refocus new loan grants to essential sectors and industries critical to function during this enhanced community quarantine, as well as loans that will thrive in the new norm,” the bank president said.

Veloso said PNB has come up with a stricter policy in granting new loans as it continues to assess the impact of the pandemic on the banking industry, as well as existing borrowers.

Veloso told stockholders, through their first virtual annual meeting, there would be a number of changes with the way PNB deals with its clients, as well as the services the bank provides.

“We will push for more digital products and services. It is not only going to be on the retail side that we’re going to focus on digital, it is also going to be on the corporate sector,” Veloso said.

Aside from the serious review of the bank’s loan portfolio, Veloso said PNB would look for new ways to generate more revenues, particularly in areas where fees and commissions could further be generated.

The net income of the Tan-led bank plunged 29.7 percent to P1.3 billion in the first quarter of the year from P1.9 billion in the same quarter of last year as it decided to take a proactive approach in its provisioning with allocation for credit losses reaching P3.4 billion or almost 10 times the P346 million booked in the same period last year.

Noel Reyes, chief financial officer at PNB, said the need for additional provisioning would depend if there is significant changes in the economic scenarios, factors considered in the calculation of in the allocation for credit losses, and actual delinquencies.