PNB profit jumps 16-fold on massive property gains

MANILA, Philippines — Philippine National Bank (PNB) earned nearly 16 times more in the first semester to P22.13 billion, boosted by the P33.6-billion windfall from the transfer of three prime real estate properties to another unit in the Lucio Tan business empire.

PNB president and chief executive officer Jose Arnulfo Veloso said the bank was able to sustain profits from core business operations and benefited from the monetization of low income-generating assets resulting in excellent results in the first half of the year.

“This allowed the bank to continue to build our loan loss provisions as the pandemic continues to impact local businesses and the overall economy,” he said.

The first half earnings included the one-off gain representing the fair market values of the 10-hectare PNB Financial Center along Macapagal Boulevard in Pasay City, the PNB Makati Center in the Ayala central business district, as well as the foreclosed eight-hectare property at the corner of Gil Puyat Avenue and Paseo de Roxas in Makati City that were transferred to wholly owned PNB Holdings Corp.

Despite the prolonged impact of the COVID-19 pandemic on the operating environment, PNB’s core operating income reached P19.3 billion from January to June. Net service fees and commission income jumped 45 percent to P2.45 billion.

Its net interest income slipped by 3.3 percent to P16.85 billion in the first half as interest earning fell by 14.7 percent to P20.84 billion.

Due to the P33.59-billion gain on loss of control of a subsidiary, PNB’s other income zoomed by 53.7 percent to P36.02 billion in the first six months.

Trading and investment securities gains plunged by 60.7 percent to P1.24 billion, while foreign exchange gains fell by 35.7 percent to P337.53 million.

Operating expenses jumped 49 percent to P32.4 billion as provision for impairment, credit and other losses more than doubled to P19.02 billion.

This translated to a higher non-performing loan (NPL) coverage ratio of 60 percent in end-June, from 43 percent in end-December, as NPL ratio improved to 5.71 percent from 6.99 percent.

For the second quarter alone, PNB’s net income reached P20.34 billion compared to only P52.6 million in the same quarter last year. The huge windfall offset the P16.93 billion provision for potential loan losses from April to June this year, 3.3 times the P5.08 billion allocated in the same period last year.

Veloso, who is also president of the Bankers Association of the Philippines (BAP), told The STAR PNB continues to collaborate with customers to help them deal with the impact of the COVID-19 pandemic as the National Capital Region and nearby provinces are under enhanced community quarantine from Aug. 6 to 20 to slow the spread of the more contagious Delta variant.

“Payment holidays and restructuring arrangements are done on a case-to-case basis with our customers,” he said.

He said the bank evaluates requests from corporate borrowers on a case-to-case basis to come up with specific calibrated solutions as agreed with borrowers, while accommodating requests from retail clients for rescheduling of loan amortizations to reduce the monthly payments for a limited period.

Likewise, PNB has been offering flexible payment programs to credit card clients.

“As we navigate through this challenging business environment, the bank’s focus for the rest of the year is to ensure uninterrupted service to its customers. We launched a new mobile app that is significantly easier to operate and will provide best customer experience,” Veloso said.

PNB’s assets inched up by two percent to P1.1 trillion in end-June, while its capital adequacy ratio of 14.03 percent and common equity Tier 1 ratio of 13.24 percent remained well above the minimum regulatory requirement of the Bangko Sentral ng Pilipinas.