Philippine National Bank reported a 34 percent hike in net income to P1.8 billion for the first quarter of this year.

In a disclosure to the Philippine Stock Exchange, the bank said this is due primarily to improvements in net service fees and commission income, reduced operating expenses and significantly lower provisions for credit losses.

For the first quarter of 2021, the bank booked P2.1 billion in provisions for credit losses, lower by 38 percent compared to the year-ago level of P3.4 billion.

The lower provisioning level resulted essentially from the Bank’s anticipatory build-up of provisions for most part of 2020 as a pro-active approach in addressing potential delinquencies that may arise from the impact of the prolonged pandemic.

Net service fees and commissions, on the other hand, grew 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 due to sustained rationalization of non-essential expenditures as well as 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, lower by 6 percent from prior year owing to weak loan demand combined with the Bank’s continued focus on strengthening its liquidity position amid lingering economic uncertainties.

Deposit liabilities in contrast increased by 7 percent to P848 billion from March 2020 levels, driven by steady growth in low cost CASA.

Other income declined by 38 percent to P1.6 billion resulting mainly from lower trading income due to limited trading opportunities in the market.

“We continue to be vigilant of the effects of the economic fallout from COVID-19 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,” PNB President and CEO Wick Veloso said.

However, he said “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.”