PNB may take in strategic investors

The group of tycoon Lucio Tan is willing to cede up to 25 percent of Philippine National Bank to a strategic partner and has received “serious” interest from three foreign institutions for a prospective buy-in deal.

But while opening itself up to strategic partners, the bank is working on acquiring a financial institution “that can bring PNB to the next level,” PNB president Wick Veloso yesterday said in a briefing after the bank’s stockholders’ meeting.

“If you take a look at our competitors, it’s not just organic growth that will allow you to move to be able to compete in the top league. So our objective right now is to find financial institutions that PNB will be able to acquire,” Veloso said.

Once the country’s largest bank in terms of assets, PNB is presently the fifth largest bank in the Philippines with resources of about P910 billion as of end-2018.

It is currently in talks for two such prospective acquisitions. “But we’re not yet in the kind of discussions that will allow us to say it’s serious talks,” he said.

To diversify its portfolio, PNB is looking into potential joint ventures with moneylending experts who serve the unbanked segment of the market.

About 54-55 percent of PNB’s loan book now is devoted to large corporate clients while 35 percent is devoted to commercial clients, including small and medium enterprises.  Only 11 percent is consumer finance-related.

In the next two to three years, Veloso said he would like to see PNB having 30 percent of its portfolio devoted to the high-margin consumer sector, referring to personal, housing, car or credit card lending.  By increasing its consumer lending, PNB expects to improve its margins and harness opportunities from a broader segment of the economy.

On a prospective foreign strategic partner, Veloso said it would ultimately be up to tycoon Lucio Tan but the management would recommend an entity that could complement the businesses that PNB would like to focus on like consumer finance, personal installment loan and digital banking.

This year, PNB has set capital spending at P4 billion, P2 billion of which would be information technology-related, PNB executive vice president Chester Luy said.

In the last three years, PNB has unlocked values from foreclosed assets while growing its core businesses.  Last year, for instance, it booked P5.8 billion in extraordinary gains from asset sales. This year, such gains will likely be lower.

This 2019 will be the last year that PNB will likely book significant extraordinary gains from asset sales as most of its prime properties had been sold in the last three years.  By 2020, PNB’s profitability will be mostly based on recurring businesses.