PNB H1 income surges to P1.8B

MANILA, Philippines—Lucio Tan-led Philippine National Bank posted a first-semester net profit attributable to equity holders of P1.77 billion, 145 percent higher year on year as hefty trading gains complemented steady interest earnings.

PNB and affiliate Allied Bank also reported that the Bangko Sentral ng Pilipinas had approved their merger plan, with PNB as the surviving entity.

After this, approval from the Securities and Exchange Commission is still needed to complete the transaction.

PNB said in a disclosure to the Philippine Stock Exchange that fee-based and other income increased by P2.3 billion for the first semester to P4.1 billion from the same level last year due to the following:

— Trading and investment securities gains expanded by a hefty P2.4 billion to reach P2.6 billion as the bank unlocked values out of securities holdings.

— Net foreign exchange gains went up to P800 million for the first semester versus P600 million in the same period last year.

On the expenditure side, administrative and other operating expenses increased by 20 percent year on year to P6 billion, largely due to higher provision for impairment and credit losses as well as miscellaneous expenses.

Provision for income tax for the six-month period amounted to P400 million versus P300 million in the same period last year.

The profit reported by PNB was net of amortization of deferred charges on special purpose vehicle amounting to P475 million and P430 million for the first semesters of 2012 and 2011, respectively, in compliance with BSP reportorial requirements.

PNB’s consolidated risk-based capital adequacy ratio stood at 22.4 percent at end-June, double the current 10-percent ratio required by the BSP.

In terms of asset quality, nonperforming loans amounted to P6.6 billion or 2.9 percent of its loan book.

PNB also reported that for the second quarter alone, attributable net profit amounted to P599.3 million, 3.4 percent lower than the level a year ago.

The six-month net profit translated to a return on equity of 9 percent, improving from the 4.3 percent ROE a year ago.

The bank spent 64 centavos to earn every P1 compared to 74 centavos in the same period last year, thereby improving efficiency by reducing this cost-to-income ratio.

Net interest income reached P3.7 billion for the first semester, inching up by a modest P105 million compared to the comparative level last year.

The dip in gross interest income was offset by lower interest expenses as the bank deliberately reduced the volume of high-cost deposits to focus more on generation of low-cost deposits.

Loans and receivables expanded by 4 percent to P131 billion in the first semester year on year, slower than the double-digit growth among its peers.

The loan book accounted for about 59 percent of its deposit liabilities, which amounted to P223 billion, or 6 percent lower year on year.

Originally posted at 06:12 pm | Wednesday, August 15, 2012