Tycoon Lucio Tan-led Philippine National Bank is moving to unlock values from its prime property assets—a program which could translate to extraordinary earnings that may even exceed its current market capitalization.
In a disclosure to the Philippine Stock Exchange last week, PNB said its board had approved a program to realize the market value of the bank’s prime properties and reduce its low-earning assets to strengthen its financial position.
“A number of options are being considered and the terms of the execution will be disclosed when all the needed approvals are obtained. Our aim is to complete this at the soonest possible time,” PNB president Wick Veloso said in a press statement.
In a research note dated Sept. 11, Abacus Securities head of research Raymond Neil Franco said PNB had valuable assets waiting to be monetized, specifically the 10-hectare head office along Macapagal Avenue, the old Allied Bank building on Ayala Avenue and the 8,000-square-meter prime lot foreclosed from musician Ramon “RJ” Jacinto.
“Given that the fair value of these properties is around P50 billion and the historical asset cost is likely to be minimal, the potential windfall could be larger than the bank’s current market cap,” the research said.
As of Friday’s closing, PNB was valued by the stock market at slightly less than P35 billion. The bank’s share price has risen by P4.04 per share or 20 percent in the last two trading days since the disclosure on the asset realization program.
“We expect the value realization of PNB’s prime properties to substantially boost capital adequacy ratios to the extent that the bank will not need funding from its parent for a long time,” the research said.
This is seen to free up more cash that parent conglomerate LT Group Inc. can use to maintain or even boost its dividends, especially as the group strives to shore up flag carrier Philippine Airlines. The airline business is among those hit hard by the ongoing coronavirus pandemic. INQ