Philippine National Bank, the fifth-largest lender in terms of assets controlled by airline and tobacco tycoon Lucio Tan, said net profit in 2018 climbed 17 percent to P9.6 billion from P8.2 billion in the previous year on the back of sustained improvement in its core businesses.
“The growth in net profit resulted from sustained efforts in strengthening the bank ’s core business. Total operating income improved by 20 percent to P38.9 billion from year-ago level of P32.3 billion on the back of increases in core revenues as well as gains from asset disposals,” the bank said in a statement Monday.
Net interest income reached P27 billion, 23 percent higher compared to the previous year, driven by a 19-percent expansion in gross loans and the widening of net interest margin to 3.3 percent from 3.1 percent.
Funding efficiencies were achieved behind a 22-percent increase in low-cost demand deposits which fueled growth in deposit liabilities.
Net service fees and commission income rose 9 percent driven by improvements in deposit, trade, and credit card-related fees as well as bancassurance income, which were partly offset by the decline in underwriting fees.
Meanwhile, net gains from sale of acquired assets increased to P5.9 billion compared to the previous year’s P3.9 billion in line with a strategy to reduce non-earning assets.
Excluding net gains from sales of foreclosed asset sales, the improvement in total operating income remains significant at 16 percent year-on-year.
Operating expenses, excluding provisions for impairment and credit losses, rose 13 percent as strong revenue growth translated into higher business taxes and other business-related cost. Without taxes and licenses, core operating expenses grew 8 percent.
The 18-percent growth in assets was funded primarily by deposits, consisting mostly of CASA deposits, as the bank continued to focus on generating low-cost funds and other stable sources of funding.
Despite the robust loan growth, PNB’s asset quality remained strong with non-performing loan ratios of 0.34 percent net of valuation reserves and 1.76 percent at gross.
NPL coverage, meanwhile, stood at 156.87 percent. PNB’s consolidated risk-based capital adequacy ratio continued to exceed the minimum regulatory requirement of 10 percent, with CAR at 14.35 percent and Common Equity Tier 1 ratio at 13.55 percent by the end of 2018.