PNB H1 profit drops 50% to P11.1 billion

MANILA, Philippines — The net income of Philippine National Bank (PNB) fell by 50 percent to P11.06 billion in the first half from P22.13 billion in the same period last year, primarily due to the one-off gain from the property-for-shares swap transaction executed in 2021.

Taking out the effect of the one-off transaction, the bank’s earnings increased by 20 percent to P26.1 billion.

PNB acting president Florido Casuela said the listed bank continues to be profitable despite the challenging economic and rate environment.

“Our strategy is in place and we are pursuing a growth path amidst a recovering economy. Our various businesses continue to focus on the needs of our customers as we support the local economy,” Casuela said.

The bank’s net interest income increased by 2.9 percent to P17.34 billion in the first semester from a year-ago level of P16.85 billion on account of higher yields on loans and receivables. Lower cost rate of deposits helped improve net interest margin to 3.4 percent from 3.3 percent.

The Tan-led bank booked an 82.3-percent plunge in total other income to P6.38 billion from P36.02 billion after booking a trading and investment securities losses amounting to P165.01 million, reversing the P1.24 billion gain made in the same period last year.

“Further, the bank continues to be challenged by the hike in benchmark interest rates during the period, resulting in contractions in trading and foreign exchange gains by 60 percent year-on-year,” the bank said.

In the first half of 2021, the bank booked a P33.6 billion gain from the property-for-share swap transaction involving three prime properties.

As a result, PNB’s total operating income fell by 52.8 percent to P26.11 billion from P55.33 billion despite the P3.6 billion gain earned from the sale of an investment property located in the Manila Harbor Centre Industrial Zone to Razon’s International Container Terminal Services Inc. (ICTSI) in April.

Net fee-based income slightly slipped by 2.8 percent to P2.38 billion from P2.45 billion coming from the surge of underwriting transactions in the prior year backed by the re-opening of the economy during the first half of 2021.

According to PNB, operating expenses increased by 11.3 percent to P14.9 billion from P13.38 billion on account of the taxes related to the sale of the Manila Harbor property, as well as higher amortization costs for the leased properties of the bank where it is currently holding its operations.

PNB’s loan book slipped by four percent to P596.5 billion in line with its prudent approach in asset deployment to optimize the use of its capital. It performed an extensive review of the credit status of its borrowers, which resulted in stage upgrading of some borrowers and consequently, booking of net reversals of credit provisions of P3.2 billion for the first half versus the P19.02 billion it allocated for bad debts in the same period last year.

On the other hand, the bank’s deposit base went up by seven percent to P885.5 billion, driven by the continued build-up of the current and savings accounts.

For the second quarter alone, PNB’s earnings dropped by 59.4 percent to P8.25 billion from P20.34 billion in the same quarter last year as the Tan-led bank booked a P33.6 billion gain from the property-for-share swap in the second quarter of 2021.

As of end-June, PNB’s consolidated resources grew by five percent to P1.2 trillion, primarily driven by higher treasury assets. Its total equity also expanded by 12 percent year-on-year, bringing its capital adequacy ratio (CAR) to 15.2 percent and Common Equity Tier 1 (CET-1) ratio to 14.5 percent, both of which remained well above the minimum regulatory requirement of 10 percent.