PNB first-half net profit falls 37% in absence of year-earlier on-offs

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071411 Makati, Philippines. File photo. Banking. A Philippine National Bank (PNB ) branch in Makati -- BW FILE PHOTO

PHILIPPINE NATIONAL Bank (PNB) said first-half net profit declined in the absence of one-off items from a year.

In a disclosure to the Philippine Stock Exchange on Friday, the bank said net profit was P2.7 billion, dropping 37% from a year earlier.

“The Bank’s net income for the first semester was lower than the P4.3 billion posted for the same period in 2016 that included one-time gains amounting to P2.7 billion,” the country’s fifth-largest bank by asset terms was quoted saying in a statement.

Despite this decline, the bank noted its core lending and deposit-taking businesses as well as fee-based activities continued to grow during the first six months of the year.

Net interest income rose nearly 8% to P10.3 billion in the six months to June, fueled by a 13% increase in interest income. The loan portfolio meanwhile rose 16%, led by business generated by corporate, commercial and small and medium-sized enterprise clients.

“Net interest income totaled P10.3 billion, higher by 7.9%… mainly due to expansion in the loan portfolio and income from deposits with banks which accounted for P1.2 billion and P0.6 billion increase in interest income, respectively, partly offset by the decline in interest on investment securities by P0.4 billion,” PNB said.

Its non-performing loan (NPL) ratio was at 0.25% while NPL coverage at 130% at end-June.

The consolidated risk-based capital adequacy ratio (CAR) was 15.89%.

Non-interest income stood at P3.4 billion year-on-year driven by one-off revenue. These include net gains from major disposals of foreclosed assets, the sale of shares of stock of a subsidiary and the collection of non-performing assets.

Boosted by cross-selling, net service fees and commission income expanded 12% year-on-year.

“Meanwhile, treasury-related income decreased substantially owing to muted trading opportunities as investors continue to stay on the sidelines amid further global monetary tightening and interest rate developments in the international markets,” PNB said.

The lender’s operating expenses increased by 6% year-on-year on the back of “prudent spending despite aggressive business growth.” This excluded provisions for impairment and credit losses.

Net consolidated resources hit P824 billion in the six months ending June, up 16% from a year earlier.

PNB’s deposits grew 17% in the first half of the year amid its “focus on generating low-cost funds and replacing matured high-cost Tier 2 Notes with Long-term Negotiable Certificates of Deposit (LTNCD.)”

Meanwhile, net profit in the three months to June fell 18% to P1.4 billion.

At the end of June, it had 685 branches and 1,143 automated teller machines in the Philippines. It also has 70 overseas bank branches, representative offices, remittance centers and subsidiaries locared in Asia, Europe, Middle East and North America. – Janine Marie D. Soliman