MANILA, Philippines — Lucio Tan-led Philippine National Bank (PNB) expects to beef up its lending portfolio by P80 billion from the sale of low-earning assets as part of its strategy to strengthen its financial position amid the global health pandemic.
In a virtual press conference, PNB president and chief executive officer Jose Arnulfo Veloso said the bank is awaiting the green light from regulators to push through with the monetization plan.
“If we are successfully able to get the nod of the regulator within the year, that allows us P80 billion worth of more loans,” Veloso told reporters.
The tobacco and airline magnate is consolidating P46.67 billion worth of prime real estate properties in the wholly owned holding firm of PNB to strengthen the bank’s financial position amid the COVID-19 pandemic.
PNB is subscribing an additional 466.77 million shares in PNB Holdings Corp. (PHC) with a par value of P100 per share in exchange for certain real estate properties of the bank. The shares will be issued out of the increase in PHC’s authorized capital stock.
The bank is undertaking an inventory of its prime properties including the 10-hectare PNB Financial Center along Macapagal Boulevard in Pasay City, office buildings in the central business district in Makati City as well as a foreclosed eight hectare property.
The pandemic-induced recession has prompted Philippine banks to sacrifice higher earnings by beefing up their respective provision for potential loan losses.
PNB recovered in the third quarter as earnings inched up by 2.9 percent to P2.51 billion as provision for probable bad loans declined by five percent to P587.34 million.
For January to September, PNB augmented its COVID-19 war chest to P9.03 billion or six times last year’s P1.43 billion. As a result, PNB’s net income retreated by 39 percent to P3.9 billion from P6.4 billion.
Veloso said PNB would have a clearer picture of the bank’s non-performing loan (NPL) ratio once the 60-day debt moratorium under Republic Act 11494 or the Bayanihan to Recover as One Act expires in December.
PNB’s gross NPL ratio reached six percent from January to September after its merger with PNB Savings Bank. Its thrift arm had an NPL ratio of 32.7 percent while PNB only had 3.9 percent.
Gross NPLs of PNB Savings amounted to P14.33 billion comprising mainly of housing and auto loans, while that of PNB reached P22.29 billion.
Without the provision for bad loans, PNB’s return on equity (ROE) would be 9.3 percent instead of 3.35 percent as of end September.
“Provisions are not losses. If moving forward you are able to have an improvement in the economic landscape and your customers do not go belly up, you will get this back,” Veloso said.