PNB profit jumps 57% in 3 months

MANILA, Philippines — Lucio Tan-owned Philippine National Bank (PNB) posted a 57 percent jump in net income to P2.81 billion in the first quarter from P1.79 billion in the same period last year on improved net interest income and net reversals of credit provisions.

PNB president and CEO Jose Arnulfo Veloso said the bank’s strong performance from January to March reflects the country’s improving economy amid the ongoing global health crisis.

“Our performance in the first quarter is a good indicator that the profit-making potential of PNB’s businesses continue to improve as the overall economy improves,” Veloso said.

Veloso said the bank  supports the incoming administration of presumptive president Ferdinand “Bongbong” Marcos Jr.  “We support the incoming leadership and will channel our efforts to help support our customers and support the rebounding economy,” he said.

PNB’s net interest income rose by 3.5 percent to P8.52 billion from P8.24 billion as interest earnings was steady at P10.32 billion due to higher yields on loans, while interest expense fell by 16.3 percent to P1.8 billion from P2.15 billion on reduced interest costs on deposits.

The bank’s net interest margin increased to 3.4 percent in the same quarter of the year from 3.2 percent in the same quarter last year.

The bank’s loan book  slipped by seven percent to P583.9 billion as it continued to refocus on borrowers under financially resilient industries.

In the first quarter, PNB
recognized net reversals of credit provisions of P394 million in the first quarter of the year from P2.1 billion in the same quarter last year to take into consideration the improvement in the credit status of borrowers who are gradually recovering from the pandemic.

“This was a turnaround from the prior year when the bank was still continuing to build its loan loss reserves to cover the bank’s non-performing accounts,” PNB said.

On the other hand, deposit liabilities expanded by three percent to P869.9 billion, coming from the build-up of current and savings accounts.

The bank also reported a 3.2 percent decline in net service fees and commission income to P1.25 billion from P1.29 billion, mainly due to lower underwriting fees since the prior year saw the resumption of various capital market transactions as the economy re-opened beginning in the first leg of 2021.

Likewise, trading and foreign exchange gains also contracted by 82 percent year-on-year as a result of the hike in benchmark interest rates during the period.

PNB’s operating expenses grew by 5.6 percent to P7.06 billion from P6.69 billion on account of higher amortization costs for the leased properties of the bank where it is currently holding its operations.

These properties were the subject of the properties-for-share swap executed in 2021.

The bank’s total assets amounted to P1.1 trillion in end- March, primarily driven by higher investment securities and other liquid placements despite the reduction in loans.

Likewise, its total equity improved by five percent to P161.9 billion, while total capital adequacy ratio (CAR) stood at 14.7 percent and common equity tier 1 (CET-1) ratio reached 14 percent, both well above the minimum 10 percent regulatory requirement of the Bangko Sentral ng Pilipinas (BSP).