PNB profits surge due to asset swap
Philippine National Bank reported that its net income surged to P31.7 billion last year, 12 times higher than the bottom line income in the previous year mainly due to a property-for-share swap with a subsidiary.
In a disclosure to the Philippine Stock Exchange on Wednesday, March 16, the bank said it registered a P33.4 billion gain from the properties-for-share swap completed last year with PNB Holdings Corporation.
This is part of a series of transactions which aim to monetize the value of the bank’s low-earning assets.
PNB said its income from core banking operations inched up two percent to P40.1 billion despite the continued impact of the COVID-19 pandemic.
“PNB continued to be profitable and was able to provide non-stop banking services to customers and the general public during the pandemic,” said PNB President and CEO Wick Veloso.
He added that, "We continued to play our part in helping customers and employees by building safer banking processes and services amidst the continuing pandemic situation."
Net service fees and commissions grew by 43 percent driven by higher loan-related and deposit-related transactions, as well as significant bancassurance and underwriting deals completed during the year.
This was supplemented by the upward traction on fees from the increasing use of the Bank’s digital platform.
The Bank reported net interest income of P34.8 billion in 2021, which is relatively flat year-on-year, and managed to maintain its net interest margin at 3.2 percent.
PNB’s loan portfolio grew by one percent to reach P607.0 billion as of end-2021, while total deposits increased year-on-year by P4.6 billion, closing at P894.9 billion as of end-2021.
It recorded trading and foreign exchange gains of P1.5 billion in 2021. This was lower by 65 percent year-on-year, because in 2020 the bank took advantage of the decline in benchmark interest rates to off load a significant amount of its trading portfolio.
While PNB continued to build its loss reserves on loans of borrowers who are directly hit by the pandemic, it recorded much lower impairment and credit provisions in 2021 by 24 percent.
As part of its continuing strategy to trim down its non-performing loans (NPL), the Bank sold certain NPLs in 2021 with gross carrying amounts prior to sale of P5.5 billion, resulting in gain on sale of P767.0 million.
Operating expenses, excluding provisions, are also lower by 6 percent compared to the previous year as the Bank focused on more essential expenditures especially during these challenging times.
The PNB’s Capital Adequacy Ratio of 13.66 percent and Common Equity Tier 1 Ratio of 12.96 percent remained above the minimum regulatory requirement of 10 percent.