PNB to strengthen retail business

MANILA, Philippines — Lucio Tan-owned Philippine National Bank (PNB) is looking to strengthen its retail lending business as part of efforts to optimize operations.

In a recent interview, PNB director Lucio “Han” Tan III said there is room to expand further into retail loans.

“In PNB, we have a large concentration on corporate loans and I feel that if we want to expand further, we can definitely go further into retail,” Tan III told The STAR.

Expanding into retail would require a scalable infrastructure including a scalable credit verification procedure “because you have to be a lot more meticulous,” Tan III said.

However, he noted the opportunity for PNB is endless and strengthening the bank’s presence into that segment would definitely enhance its value.

Tan III said that PNB is currently trading lower than its actual earnings, in terms of price-to-book ratio, which is a financial ratio used to compare a company’s  current market value to its book value.

The bank closed flat at P18.88 per share on April 5. Its 52-week high is P20.50 per share while its 52-week low is P16.72 per share.

Last year, PNB’s net income fell by 63.4 percent to P11.58 billion from P31.69 billion in 2021 due to a one-off gain booked as a result of a property swap with a subsidiary.

In particular, PNB recognized a one-off gain of P33.6 billion arising from the loss of control over PNB Holdings Corp. as a result of a property-for-share swap involving prime properties in the cities of Makati and Pasay.

Net interest income, meanwhile, reached P37.3 billion last year, up by seven percent from a year ago due to higher yields on interest-earning assets.

The bank’s gross loan portfolio settled at P613.6 billion as of end-December 2022, lower by three percent from prior year’s level, reflective of the bank’s lending stance to fast-track collection of short-term loans with minimal profitability and re-direct new loan grants to essential sectors that thrive in the new normal.

PNB is the 7th largest bank in terms of assets as of end-December, according to the Bangko Sentral ng Pilipinas.

The bank is part of LT Group, the listed holding company of Tan.

Tan III, the grandson and namesake of the taipan, is set to take the helm of LTG as president no later than April 30, a year after the listed conglomerate made the announcement.

As president and COO of LTG, Tan III said he would strive to enhance the value of the different operating companies under LTG including PNB.

His appointment as COO and now as president marks a new chapter in the continuing story of Tan’s sprawling business empire as it sheds light on the group’s succession story, which for decades now has long been considered complicated and ambivalent.