PNB profit up on reversal of credit provisions

Published May 13, 2022, 3:02 PM

by James A. Loyola

Philippine National Bank registered a 57 percent jump in net income for the first quarter of 2022 to P2.81 billion from the P1.79 billion earned in the same period last year.

In a disclosure to the Philippine Stock Exchange, the bank said this is primarily due to improved net interest income and net reversals of credit provisions booked during the period.


“Our performance in the first quarter is a good indicator that the profit-making potential of PNB’s businesses continue to improve as the overall economy improves,” said PNB President and CEO Wick Veloso.

PNB recorded net interest income of P8.5 billion, increasing by 3 percent from the same period last year, due to higher yields on loans, alongside reduced interest costs on deposits.

Net interest margin of the Bank increased to 3.4 percent from 3.2 percent in the same quarter in 2021.

Gross loans as of end-March 2022 closed at P583.9 billion, down by 7 percent from the level last year, as the Bank continued to refocus on borrowers under financially resilient industries.

On the other hand, deposit liabilities expanded to P869.9 billion, up by 3 percent compared to the level as of end-March 2021 coming from the build-up of current and savings accounts.

During the first quarter of 2022, PNB recognized net reversals of credit provisions of P394 million to take into consideration the improvement in the credit status of borrowers of the Bank who are gradually recovering from the pandemic.

This was a turnaround from the prior year when the Bank was still continuing to build its loan loss reserves to cover the Bank’s non-performing accounts.

Net service fees and commission income slightly declined by 3 percent, mainly due to lower underwriting fees since the prior year saw the resumption of various capital market transactions as the economy re-opened beginning in the first leg of 2021.

Trading and foreign exchange gains also contracted by 82 percent year-on-year as a result of the hike in benchmark interest rates during the period.

Operating expenses increased by 6 percent year-on-year on account of higher amortization costs for the leased properties of the Bank where it is currently holding its operations. These properties were the subject of the properties-for-share swap executed in 2021.

Total consolidated resources of the Bank as of end-March 2022 amounted to P1.1 trillion, slightly higher than the level as of the same quarter-end last year, primarily driven by higher investment securities and other liquid placements despite the reduction in loans.

Likewise, the Bank’s total equity improved by 5 percent year-on-year to P161.9 billion. Total Capital Adequacy Ratio and Common Equity Tier 1 Ratio at 14.7 percent and 14.0 percent, respectively, remained well above the minimum regulatory requirement of 10.0 percent.