THE STATE-OWNED Land Bank of the Philippines, the only one among the country's top 10 banks that defied the trend of shrinking earnings this year, expects to hit a net profit of P5 billion in 2009 despite the bleak global economic environment.

The projected profit next year will be 11 percent higher than the P4.5 billion that the bank expects to chalk up by the end of this year, Landbank president Gilda Pico said in a press briefing.

Landbank posted a 7-percent year-on-year rise in net profit from January to October to P4.15 billion on higher lending and fee-based income. At the same time, its ratio of bad loans to total loans fell to a record-low 3.74 percent as of end-October, better than the average banking industry ratio of 3.88 percent.

"Loan (portfolio) is really the one giving us income plus fee-based income like (in channeling) remittances from OFWs (overseas Filipino workers)," Pico said.

"At the rate we are going, we are confident of exceeding our P4.5 billion net income target by end-2008. This will enable us to sustain our agrarian operations and further pursue our agenda of rural growth and development," she said.

The bank's total assets expanded to P390.1 billion as of end-October from P359.6 billion a year ago. It generated P304.2 billion in deposits, about 13 percent higher than a year ago.

Lending volume also went up 27 percent to P153.1 billion as of end-October from a year ago.

Pico said the bank's increased profitability was sustained while it boosted lending to priority sectors like small farmers and fisher folk; micro, small and medium enterprises; livelihood programs; agribusiness; agri infrastructure; and environment-related projects. These priority sectors accounted for 68 percent of the bank's total portfolio.

Meanwhile, the decline in the nonperforming loan ratio was attained because of the decline in total NPLs to P6.8 billion in end-October from P9.3 billion a year ago. Total bad assets thus dropped 22 percent to P16.1 billion.

For every peso of bad loan, Landbank had set aside P1.88 in loss provisions, much higher than the average industry ratio of 98.69 percent. Reserve coverage for total bad assets, on the other hand, stood at 83 percent against the industry ratio of 49 percent.

Based on the banking industry's report on income results for the first nine months, Landbank ranked second highest after Bank of the Philippine Islands, posting P3.81 billion for the period against BPI's P5.32 billion. Landbank is also the only one among the country's top 10 banks which posted an increase in profits during the period over a year ago.

Pico has also announced plans to sell its 46 million shares or 4-percent stake in Manila Electric Co. for about P90 a share. The net present value of the transaction, accounting for the cost of money if payments were received on a staggered basis, is about P83 per share.