PNB hikes stake in leasing, finance unit

MANILA, Philippines — Listed Philippine National Bank (PNB) infused an additional P515 million to raise its stake in a leasing and finance joint venture to 83.5 percent from the previous 75 percent.

In a disclosure to the Philippine Stock Exchange (PSE), the board of directors of PNB approved the infusion of additional capital to PNB-Mizuho Leasing and Finance Corp. (formerly known as PNB-IBJL Leasing and Finance Corp.)

The company, formerly Japan-PNB Leasing and Finance Corp., was incorporated in April 1996. It was largely inactive until it was used as the vehicle for the joint venture between PNB with 60 percent, IBJ Leasing Co Ltd. Tokyo with 35 percent, and Industrial Bank of Japan, now called Mizuho Corporate Bank with five percent.

It was renamed Japan-PNB Leasing and Finance Corp. and the joint venture company commenced operations in February 1998.

PNB raised its stake in 2011 to 90 percent after IBJ Leasing sold its 25 percent interest and Mizuho sold its five percent stake.

In November 2014, IBJ Leasing acquired an additional 15 percent stake in the leasing and finance company that was renamed Japan-PNB Leasing and Finance Corp. in March 2015.

Three years later, PNB sold another 25 percent stake in the joint venture in August 2018. The joint venture was renamed PNB-Mizuho Leasing and Finance Corp. in March 2020.

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 last year as earnings inched up by 2.9 percent to P2.51 billion from P2.44 billion in the same quarter last year as provision for probable bad loans declined by five percent to P587.34 million from P618.11 billion.

From January to September last year, it augmented its COVID-19 war chest to P9.03 billion or six times the previous year’s P1.43 billion. As a result, PNB’s net income declined by 39 percent to P3.9 billion from P6.4 billion.

PNB’s gross NPL ratio reached six percent from January to September last year 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 last year.