PNB posts 57% growth in net income

13 May 2022 — Philippine National Bank (PSE: PNB) registered better net income for the first quarter of 2022 of P2.81 billion compared to the net results of P1.79 billion in the same period last year, primarily due to improved net interest income and net reversals of credit provisions booked during the period.

The Bank recorded net interest income of P8.5 billion, increasing by 3 percent from the same period last year, due to higher yields on loans, alongside reduced interest costs on deposits. Net interest margin of the Bank increased to 3.4 percent from 3.2 percent in the same quarter in 2021.

Gross loans as of end-March 2022 closed at P583.9 billion, down by 7 percent from the level last year, as the Bank continued to refocus on borrowers under financially resilient industries. On the other hand, deposit liabilities expanded to P869.9 billion, up by 3 percent compared to the level as of end-March 2021 coming from the build-up of current and savings accounts.

During the first quarter of 2022, the Bank recognized net reversals of credit provisions of P394 million to take into consideration the improvement in the credit status of borrowers of the Bank who are gradually recovering from the pandemic. This was a turnaround from the prior year when the Bank was still continuing to build its loan loss reserves to cover the Bank’s non-performing accounts.

Net service fees and commission income slightly declined by 3 percent, mainly due to lower underwriting fees since the prior year saw the resumption of various capital market transactions as the economy re-opened beginning in the first leg of 2021. Trading and foreign exchange gains also contracted by 82 percent year-on-year as a result of the hike in benchmark interest rates during the period.

Operating expenses increased by 6 percent year-on-year on account of higher amortization costs for the leased properties of the Bank where it is currently holding its operations. These properties were the subject of the properties-for-share swap executed in 2021.

Total consolidated resources of the Bank as of end-March 2022 amounted to P1.1 trillion, slightly higher than the level as of the same quarter-end last year, primarily driven by higher investment securities and other liquid placements despite the reduction in loans. Likewise, the Bank’s total equity improved by 5 percent year-on-year to P161.9 billion. Total Capital Adequacy Ratio and Common Equity Tier 1 Ratio at 14.7 percent and 14.0 percent, respectively, remained well above the minimum regulatory requirement of 10.0 percent.

“Our performance in the first quarter is a good indicator that the profit-making potential of PNB’s businesses continue to improve as the overall economy improves,” said PNB President and CEO Wick Veloso. “We support the incoming leadership and will channel our efforts to help support our customers and support the rebounding economy,” he added.

In the 17th PDS Annual Awards held last March 25, 2022, PNB received two awards from the Philippine Dealing System Group namely: “The Top Fixed-Income Brokering Participant” as the Bank garnered the highest total volume turnover of securities transacted by face amount; and one of the “Top Five Fixed-Income Cash Settlement Banks” for having generated the highest volume for 2021 as measured by the total number of fixed-income transactions settled for PDEx Trading Participants who are non-demand deposit account holders at the central bank.

For the second year in a row, the PNB’s Research Division has been recognized by Asiamoney as the “Best Bank for Investment Research in the Philippines”. In 2021, the PNB Research team published 212 reports covering economic and equity research, providing up-to-date investment ideas. The report said, “As a result, PNB’s private wealth clients were better able than most to react to fast-moving government mobility restrictions.”