PNB sees 51% jump in earning
The Philippine National Bank (PNB) is expecting a 51 percent jump in net income this year after a major slump last year.
PNB president and chief executive officer Jose Arnulfo Veloso said the rosy profit forecast could be achieved even without the proceeds from the planned sale of prime real estate properties.
“I am very optimistic about the financial numbers of 2021, especially we’re now able to finally conclude the monetization of real estate properties. Nevertheless, without the monetization of the real estate properties, our income is projected to move up by 51 percent,” Veloso said.
Veloso earlier said the transaction would allow the bank to beef up its lending portfolio by P80 billion from the sale of low-earning assets. The inventory includes the 10-hectare PNB Financial Center along Macapagal Boulevard in Pasay City, office buildings in the central business district in Makati City, as well as the foreclosed eight-hectare property from Ramon Jacinto.
The Lucio Tan-led bank announced in 2018 that it was planning to put up a state-of-the-art and worldclass 60-story building that would serve as its new headquarters.
“Regarding the monetization of the three major real estate assets of the bank, I want to share with you that we are meeting our timeline and are optimistic that we will close the transaction by the end of this year,” Veloso said.
Furthermore, he said PNB’s net income is projected to steadily increase from 2022 to 2023, supported by improvement in net interest income with higher income contribution from loans as growth is anticipated at double-digit, coupled with increase in yield rates.
According to Veloso, 2020 could have been a banner year for PNB if it were not for the challenging economic landscape and the loan loss allowance that it had to set aside for non-performing loans (NPLs).
The listed bank took a proactive approach in its provisions that reached P16.88 billion last year or almost six times the P2.91 billion in 2019 due to economic uncertainties on the impact of COVID-19. As a result, its net income fell by 73 percent to P2.62 billion from P9.76 billion.
Despite the increase in provisioning, its NPL coverage declined to 42.51 percent from 85.81 percent, while its NPL ratio rose to 6.93 percent from 1.54 percent.
PNB’s loan book decreased by 8.8 percent to P600 billion from P657.92 billion, while its deposit base expanded by 7.8 percent to P890.29 billion from P826.04 billion.
“The bank is refocusing its new lending activities to essential sectors and industries that have critical functions during the quarantine and as the economy is recovering.
These industries such as telecommunications, human health and social work activities, private general hospital activities, retail selling in supermarkets and manufacturing of food products with undisrupted supply chain can thrive in the new normal or are essential to the recovery of the economy.
“These include projects covered by the ongoing infrastructure program of the government which is focused on supporting economic recovery efforts,” Veloso said.
Veloso said plans to take a strategic foreign partner that could help PNB in the retail and consumer finance business would be revived once the monetization of real estate properties is completed.