Philippine National Bank, the financial unit of tobacco and airline tycoon Lucio Tan, said Monday net profit in the first nine months declined 57 percent to P11.4 billion from P26.4 billion a year ago.
It said in a statement the lower profit was due to the one-off P33.6-billion gain from the property-for-shares swap transaction in 2021.
“Without the effect of this one-off transaction, the operating income of the bank showed growth of 14 percent year-on-year,” it said.
PNB acting president Florido Casuela said the bank continued to be profitable as it showed improvements in efficiency, pushing its momentum towards achieving strategic priorities.
“Our results indicate that we have the right strategy to deliver real value to our clients, our investors and the overall economy in these challenging times,” Casuela said.
PNB’s nine-month net income went up by P289 million from the first-half net results, buoyed by stronger net interest margins in the third quarter.
The nine-month net interest income increased by 4 percent year-on-year, led by a 21-percent growth in interest income earned from investment portfolio and other liquid placements amid the rising interest rate environment, resulting in an improved net interest margin of 3.4 percent from 3.3 percent a year ago.
The bank reported a P3.6-billion gain from the sale of an investment property in the second quarter, which further boosted its year-to-date net operating results.
Gross loan portfolio rose 1 percent year-on-year to P638.3 billion as of end-September as the bank further stretched its lending to large corporates during the period.
Provisions set up on these loans were 97-percent lower than the amounts provided in the same period last year when PNB was continuing to build its loan loss reserves, particularly on accounts impacted by the pandemic.
The bank continued to build up its current and savings deposits, resulting in a modest 1-percent increase in total deposits from the year-ago level, tempered by initiatives to further trim down high-cost time deposits amid the rise in benchmark interest rates.
Net fee-based income in the first three quarters contracted by 8 percent year-on-year, on reductions in credit-related and underwriting fees.
The bank said it took advantage of the strong capital markets in 2021, closing good-sized deals, which translated into higher underwriting fees.
Treasury-related income declined year-on-year, owing to muted trading opportunities amid the global monetary tightening and hike in benchmark interest rates.
Operating expenses increased by 12 percent year-on-year on account of the taxes related to the property sale andhigher amortization costs for the leased properties of the bank where it is cholding its operations. These properties were the subject of the properties-for-shares swap executed in 2021.
The bank ended the third quarter with total consolidated assets of P1.15 trillion, 1 percent higher than a year ago on the back of growth in loans and treasury assets.
Reported income elevated its total equity by 10 percent year-on-year, bringing its capital adequacy ratio to 14.5 percent and common equity tier 1 ratio to 13.8 percent.