PNB profits down 65%in H1

MANILA, Philippines — Earnings of Lucio Tan-led Philippine National Bank (PNB) plunged by 65 percent from January to June after a sharp drop in the second quarter as provision for bad loans soared almost 10-fold in anticipation of higher defaults due to the impact of the   COVID-19 pandemic.

The net income of PNB amounted to P1.39 billion from January to June, P2.58 billion lower than the P3.97 billion recorded in the same period last year.

For the second quarter alone, the earnings of PNB plummeted by 97.5 percent to P52.6 million from P2.07 billion in the same quarter last year.

PNB president and chief executive officer Jose Arnulfo Veloso said the bank’s performance in the first half demonstrates the depth and resiliency of its core business as the bank sustained its growth momentum, built on a solid business franchise with continued and strong support from its customers.

“As the uncertainties from the pandemic persist, we will continue to take a pragmatic approach on loan provisioning to proactively protect the bank’s balance sheet against potential credit losses,” Veloso said.

The bank increased its provision for impairment, credit and other losses to P8.44 billion in the first half from only P808.82 million.

Provisioning in the second quarter reached P5.08 billion, more than 10 times the P463.04 million earmarked in the second quarter last year.

PNB’s total revenues went up by 24 percent to P23.62 billion in the first half from P19.13 billion in the same period last year, driven by continuous growth in lending and trading activities despite the COVID-19 pandemic.

The bank’s net interest income increased by 19 percent to P17.5 billion from P14.7 billion, on account of reduced high-cost deposits.

The Tan-led bank’s loan book inched up one percent to P602.6 billion, while its deposit base rose by two percent to P790.7 billion.

As favorable market opportunities continue during the second quarter of 2020, PNB recorded a 78 percent jump in trading securities gains to P3.2 billion.

Excluding provisions for impairment and credit losses, PNB’s operating expenses inched up by only two percent to P13.4 billion, as robust revenue streams translated to higher business taxes and other business-related expenses.

However, the bank’s expenses surged by 56 percent to P21.85 billion in the first quarter from P13.93 billion due to the 10-fold increase in the provision for soured loans.

PNB’s total assets stood at P1.08 trillion as of end June, while total capital increased by 13 percent to P154.3 billion, resulting in a capital adequacy ratio (CAR) of 15.86 percent and common equity tier 1 ratio of 14.99 percent.