PNB sees 51% profit growth in 2021

Tycoon Lucio Tan-led Philippine National Bank expects to grow its net profit this year by 51 percent, excluding the impact of extraordinary gains the bank may unlock from its valuable pool of real estate assets.

Coming from a P2.6-billion attributable net profit last year, which marked a decline of about 73 percent due to a larger provisioning made for probable loan losses, this earnings growth outlook suggests that PNB is gunning for about P3.93 billion in net profit this year.

“I’m very optimistic about the financial numbers of 2021, especially if we’re now able to finally conclude the monetization of real estate properties,” PNB president Wick Veloso said in a briefing on Friday.

“Nevertheless, without the monetization of real estate properties, our income is even projected to move up by 51 percent,” he said, adding that this assumed a low and nonvolatile interest rate regime.

If the United States suddenly raises interest rates and causes volatility in the market —thereby reversing the record-low interest rate regime—Veloso said this could even provide a “bigger bonus” for PNB.

On the monetization of property assets, PNB seeks to reduce its low-earning assets to strengthen its financial position.

Among the valuable assets waiting to be monetized are the 10-hectare existing head office along Macapagal Avenue, the old Allied Bank building on Ayala Avenue and the 8,000-square-meter prime lot foreclosed from musician-businessman Ramon “RJ” Jacinto. These three big properties have an estimated fair value of about P50 billion, or larger than PNB’s current market capitalization of P35 billion.

Veloso said he was optimistic that the real estate monetization would be consummated this year, boosting momentum to sustain its earnings growth beyond 2021.