The Lucio Tan Group’s Philippine National Bank (PNB) posted a 12.6 percent decline in net profits to P9.7 billion for the first six months of 2023 from P11.1 billion in the same period last year.

In a disclosure to the Philippine Stock Exchange, the bank said it saw sustained growth in net interest margin and revenues from fee-based businesses during the period.

The bank's net interest income grew by 25 percent year-on-year to P21.6 billion, primarily driven by higher yield rates on earning assets amid the rising interest rate environment. 

This translated to an improved net interest margin of 4.24 percent from the 3.35 percent reported in the same period last year. 

Likewise, fee-based revenues increased by 31 percent to P3.1 billion with higher volumes of credit and deposit-related transactions as well as intensified cross-selling efforts of the bank during the first half of the year.

PNB’s net income for the first semester, however, was lower than its year-ago level of P11.1 billion, which included substantial reversals of credit provisions aggregating P3.2 billion as a major portion of the bank’s non-performing Covid-impacted accounts showed improvements in their credit and payment status with the re-opening of the economy and recovery of most businesses in 2022. 

On the other hand, the bank prudently set aside additional provisions amounting to P1.6 billion given the prevailing uncertainties in 2023 due to rising interest rates.

Meanwhile, the bank took advantage of the market rate movements during the period resulting in a 53 percent growth in treasury-related income despite the limited trading opportunities brought about by the ongoing global monetary tightening. 

PNB also continued its strategy to dispose and monetize the values of its foreclosed properties in the first half of 2023, albeit lower than the gains posted a year ago.

Operating expenses remained flat at P14.9 billion due to prudent spending despite the continued business growth.

As of end-June 2023, the bank's total consolidated assets stood at P1.16 trillion, which is relatively flat against the year-ago level. 

Gross loans inched higher from year-ago by 0.7 percent to P615 billion as the Bank accelerated its commercial lending by 9 percent year-on-year. 

The growth in loans was funded by deposits, which likewise slightly went up by 0.8 percent year-on-year to P892.9 billion, following the maturities during the period of Long-Term Negotiable Certificates of Deposit worth P10.1 billion.

“PNB is able to sustain its profitability on the back of sound execution of business strategies that are expected to ensure long-term growth as set forth in our vision, mission, and strategy for the next five years,” said PNB President Florido P. Casuela.

He added that, “our growth initiatives are focused on strengthening commercial banking and the consumer finance business. We intend to play a key role in helping small and medium enterprises flourish as the nation continues to journey towards recovery.”