Philippine National Bank reported a 39 percent drop in net income for the first nine months of the year to P3.9 billion due to the recognition of anticipatory loan impairment provisions.
In a disclosure to the Philippine Stock Exchange, the firm said it posted an operating profit, before credit provisions and taxes, of P14.1 billion in the first nine months of 2020, 42 percent higher than the same period last year, spurred by sustained growth in its core banking activities.
For the nine-month period, the Bank’s net interest income increased by 12 percent year-on-year to P26.2 billion, driven by lower funding costs due to the stable growth in low-cost deposits combined with the significant reduction in levels of high-cost deposits, particularly with the maturity of P7.0 billion worth of Long-Term Negotiable Certificates of Time Deposit (LTNCDs).
Loans and receivables as of end-September 2020, however, declined from 2019 year-end level as the Bank focused on strengthening its liquidity position.
To remain resilient during the pandemic, the Bank fortified its liquidity management and invested most of the available funds in short-term and more liquid placements. As a result, current ratio of the Bank as of end-September 2020 increased to 65 percent from 59 percent as of year-end 2019.
“Our performance this quarter continues to show improvements in core income despite the Bank’s prudent approach in asset deployment amidst the difficult operating environment. Our strategies, backed by a strong franchise and loyal customer base helped the Bank adapt to the pandemic conditions,” PNB President Wick Veloso said.
He added that, “We look forward to seeing greater opportunities for PNB to help support our customers as they navigate through the pandemic. We continue to enhance our capabilities so that we are able to play a more active role in rebuilding the economy.”
During the nine-month period, the Bank also recorded significant increase in net trading securities gains amounting to P3.4 billion, higher by 227 percent year-on-year as the Bank took advantage of favorable
market opportunities during most part of the year.
When the COVID-19 outbreak started to impact businesses in March this year, the Bank took a pre-emptive approach on its loan provisioning and started building loan loss reserves in anticipation of the increase in non-performing loans from borrowers who were affected by the pandemic.
To date, the Bank has recognized impairment provisions amounting to P9.0 billion, which is 6 times higher than the amounts set aside during the same period last year.
The Bank continues to proactively work with its customers and other stakeholders to mitigate the impact of the pandemic to its loan portfolio and other credit exposures.