PNB income up 5% to P5.5B last year

The Philippine National Bank (PNB) posted a net income of P5.5 billion in 2014, reflecting a 5-percent increase from its previous year’s level-despite the challenging conditions in the local financial markets that caused the bank’s trading gains to decline substantially by 72 percent to P1.3 billion.

PNB beefed up its income from its growing core business as it took steps to shift marketing focus from large corporates to commercial/SMEs and consumer segments. Thus, interest income on loans and receivables grew by 16 percent to P15.2 billion

PNB also successfully decreased its interest expense by 23 percent to P3.6 billion as the Bank concentrated on generating low cost funds and paid off high cost liabilities, particularly with the redemption of its P6.7 billion high interest-bearing Long-Term Negotiable Certificates of Deposits (LTNCDs).

As a result, net interest income grew by 23 percent to P16.9 billion, accounting for 64 percent of total operating income in 2014. PNB’s operating income increased by 12 percent to P26.4 billion, augmented by other income (excluding gains from securities trading) which rose by 33 percent principally from the sale of PNB’s foreclosed assets. Starting in the fourth quarter of 2014, PNB implemented an aggressive strategy in the disposal of its acquired properties through regional simultaneous public sealed biddings in all domestic branches which yielded higher gains for the Bank.

By the end of 2014, PNB’s total consolidated resources expanded to P625.4 billion, up P9.2 billion from year-ago level. The Bank continued to improve its asset quality as non-performing loans (NPL) ratio decreased to 0.92 percent from 1.39 percent in December 2013 while the NPL coverage ratio improved to 99.19 percent from 90.84 percent in December 2013.

In the first quarter of 2014, PNB successfully raised P11.6 billion in fresh capital via a stock rights offering. This is to strengthen the Bank’s capital position and prepare for the higher minimum capital requirements of Basel III. The stock rights offering was oversubscribed by both existing and new investors, indicative of the long-term positive prospects of PNB. By the end of 2014, the Bank’s consolidated capital position remained very strong with a Capital Adequacy Ratio (CAR) of 20.6 percent and a CET 1 ratio of 17.4 percent which are well-above the minimum 10 percent and 8.5 percent required by the Bangko Sentral ng Pilipinas (BSP). The substantial buffer ensures enough capital for PNB to build up further its assets to be able to capitalize on the opportunities arising from the sustained economic growth of the Philippines.

Further supporting its anticipated asset growth, PNB also embarked on another fund raising activity by end of 2014 through the successful issuance of P7 billion worth of LTNCDs. The issuance was celebrated with a bell ringing ceremony to mark the first time PNB listed peso-denominated LTNCDs at the Philippine Dealing Exchange.

PNB continued to undertake initiatives to enhance its organization and delivery of service. In July 2014, PNB’s Consumer Finance Group was consolidated with PNB Savings Bank, a wholly owned subsidiary of the Bank in order to strengthen its presence in the growing consumer lending business. PNB likewise infused P10 billion from the proceeds of its stock rights offering to beef up PNB Savings Bank.