Net profit of PNB rose 5% to P5.5B last year

Tycoon Lucio Tan’s Philippine National Bank (PNB) grew its profit slightly last year despite a sharp drop in trading gains, which affected the entire financial industry.

In a statement, the company said it paid off high-cost liabilities and focused on growing in the high-margin small to medium enterprise (SME) lending segment to offset the weakness of its treasury business.

Last year, the company booked a net income of P5.5 billion, reflecting a 5-percent increase from the previous year’s level “despite the challenging conditions in the local financial markets.”

Volatility in financial markets led to a 72-percent decline in the bank’s trading profits to P1.3 billion.

“Anticipating these developments, PNB beefed up its income from its growing core business as it took steps to shift marketing focus from large corporations to commercial and SMEs and consumer segments,” the company said.

PNB is the country’s fourth-largest private commercial bank in terms of assets and deposits. As of Dec. 31, 2014, PNB had 657 branches and 878 automated teller machines (ATMs).

The bank said it brought down interest expenses by 23 percent to P3.6 billion by generating low-cost funds and settling high cost liabilities, particularly with the redemption of its P6.7 billion high interest-bearing Long-Term Negotiable Certificates of Deposits (LTNCDs).

As a result, net interest income grew by 23 percent to P16.9 billion, accounting for 64 percent of total operating income in 2014. PNB’s operating income increased by 12 percent to P26.4 billion, augmented by other income (excluding gains from securities trading), which rose 33 percent principally from the sale of PNB’s foreclosed assets.

Starting in the fourth quarter of 2014, PNB implemented an aggressive strategy in the disposal of its acquired properties through simultaneous regional public sealed auctions in all its branches.

By the end of 2014, PNB’s total consolidated resources expanded to P625.4 billion, up P9.2 billion from the year-ago level.

The bank continued to improve its asset quality as its nonperforming loans (NPL) ratio decreased to 0.92 percent from 1.39 percent in December 2013 while the NPL coverage ratio improved to 99.19 percent from 90.84 percent in December 2013.