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PNB net income down in Q3

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PHILIPPINE National Bank (PNB) recorded a lower net income in the third quarter as it set aside higher credit provisions.

The bank’s net profit dropped 12.9% to $2.182 billion year on year in the third quarter of 2021 from $2.506 billion, based on its financial report published on Friday.

“Our performance this quarter shows that PNB continues to be profitable despite the negative impact of the pandemic on some of our customers and the overall economy,” PNB President and Chief Executive Officer Jose Arnulfo “Wick” A. Veloso said in a statement.

“With the recent reduction in COVID-19 cases, we are seeing a better-moving economy as the government is allowing more mobility. We continue to serve our customers and work together with the government with the goal of supporting the Philippine economy in the road to recovery,” Mr. Veloso said.

In the first nine months of the year, PNB’s net income surged by more than six times (524%) to P24.312 billion from P3.896 billion in the same period of 2020.

In May, the bank recognized a one-off gain of P33.6 billion from the transfer of prime real estate properties in exchange for shares of PNB Holdings Corp.

PNB’s return on equity and assets as of end-September were at 14% and 1.8%, respectively.

The lender’s net interest income in the third quarter rose 2.79% year on year to P8.901 billion from P8.659 billion. This was backed by higher interest earnings as interest expense declined.

PNB’s net interest margin as of end-September was at 3.3%, slightly down from 3.6% a year earlier.

Meanwhile, net income from service fees and commissions rose 65.7% to P1.414 billion in the July to September period from P853.146 million a year ago.

Other income also improved 14% to P1.005 billion in the three months to September from P878.446 million in the same period of 2020.

“[This] is mainly due to the recognition of P800-million gain on sale of certain loans,” the bank said. It was partially offset by losses from foreign exchange and lower equity in net earnings of an associate, PNB added.

For the third quarter, PNB’s operating expenses rose 10% to P7.851 billion year on year from P7.128 billion.

The bank’s provision for impairment losses surged 142% to P1.423 billion in the quarter from P587.426 million a year earlier. This brought PNB’s provisions for the first nine months to P20.445 billion, up 126% from P9.02 billion in the same period of 2020.

The bank’s loans and receivables stood at P600.07 billion as of end-September. Gross non-performing loan (NPL) ratio reached 10.8%, while NPL coverage ratio was at 63.6%.

The bank’s consolidated total assets increased 11% from year-ago levels to P1.1 trillion backed by higher loans and treasury assets.

On the funding side, PNB’s deposit liabilities rose 16% year on year to P854.738 billion as of end-September. The expansion was mainly backed by current account, savings account deposits.

As of end-September, PNB’s capital adequacy ratio stood at 14.3%, while common equity Tier 1 ratio was at 13.5%. Both are above minimum regulatory requirements.

PNB closed at P20.95 on Friday, down by 45 centavos from its previous finish. — Luz Wendy T. Noble

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