Philippine National Bank, the fifth-largest lender in terms of assets and owned by tycoon Lucio Tan, said Friday net income in the first quarter of 2021 climbed 34 percent year-on-year to P1.8 billion, on strong service fees and commission income, reduced operating expenses and significantly lower provisions for credit losses.
PNB booked P2.1 billion in provisions for credit losses, lower by 38 percent than P3.4 billion a year earlier. The lower provisioning level resulted from the bank’s anticipatory build-up of provisions for most part of 2020 as a pro-active approach in addressing potential delinquencies that might arise from the impact of the prolonged pandemic.
PNB president and chief executive Wick Veloso said the bank remained vigilant of the effects of the economic fallout from the COVID-19 pandemic on the bank’s operations and businesses.
“It is for this reason that PNB continues to adopt a prudent approach in asset deployment which affected the bank’s net interest margins. However, we remain confident that such strategy together with the tactical actions we are taking will ensure that the bank will be able to emerge from the crisis stronger,” Veloso said.
Net service fees and commissions rose 35 percent on the back of higher fees from underwriting activities as well as credit cards and bancassurance businesses.
Operating expenses, excluding provisions for impairment and credit losses, declined 8 percent over the same period last year on sustained rationalization of non-essential expenditures and operational efficiencies as the bank transitions to more automation and technology-driven processes to adapt to the demands of the new normal.
PNB’s net interest income declined 7 percent to P8.2 billion on account of reduced earnings from loans to corporate, commercial and small and medium enterprises, alongside investment securities, reflecting the downward trajectory of benchmark interest rates beginning the second quarter of 2020.
Loan receivables stood at P609.3 billion as of end-March 2021, down by 6 percent from the prior year owing to weak loan demand combined with the bank’s continued focus on strengthening its liquidity position amid lingering economic uncertainties.
Deposits increased by 7 percent to P848 billion from March 2020 levels, driven by steady growth in low-cost CASA (current and savings account).
Other income declined by 38 percent to P1.6 billion, resulting mainly from lower trading income due to limited trading opportunities in the market.
PNB’s consolidated resources stood at P1.1 trillion as of end-March, up by 4 percent from year-ago level. Its capital adequacy ratio of 14.77 percent and common equity tier 1 ratio of 14.11 percent remained above the minimum regulatory requirement of 10 percent.
