PSBank hikes provision for bad loans by 39% in Q1

MANILA, Philippines — Philippine Savings Bank (PSBank) beefed up its provision for potential loan losses by 39 percent in the first quarter amid the pandemic.

PSBank president Jose Vicente Alde said the thrift bank arm of Metropolitan Bank & Trust Co. (Metrobank) sustained its conservative provisioning strategy in the first three months.

“As the pandemic continues to affect the business environment, prudence dictates that we maintain a conservative stance on our provisioning to cushion any potential risks on asset quality,” Alde said.

The net non-performing loan (NPL) ratio of PSBank improved to a manageable 4.3 percent in end-March from 5.2 percent in end-2020.

As a result, net income of PSBank fell by 32 percent to P439 million in the first quarter from P642 million in the same period last year.

During the period, the bank’s pre-provision operating profit was up eight percent to P1.61 billion due to the increase in other operating income, reduction in expenses and improved margins arising from reduced cost of funds.

Its gross revenues stayed flat at P3.77 billion.

Net interest income slipped by three percent to P3.14 billion from P3.2 billion.

The bank’s low-cost checking and savings account (CASA) deposits went up by 12 percent to P67.86 billion from P60.6 billion, resulting in improvements in asset margins.

PSBank continued to reap the benefits out of its operational productivity and efficiency initiatives as operating expenses declined by six percent, while cost-to-income ratio further improved to 57 percent from 69 percent.

The capital position of the bank stood at P34.64 billion as of end-March. Total capital adequacy ratio and common equity tier 1 ratio (CET1) further improved to 21 percent and 19.7 percent respectively, close to double the regulatory minimum.