Philippine National Bank (PSE: PNB) registered a core operating income of PhP19.3 billion for the first half of 2021 as the bank managed to sustain its core banking activities despite the prolonged impact of the COVID-19 pandemic on the operating environment.
During the period, PNB augmented its net income with the booking of a one-off gain of PhP33.6 billion. This represents the increase in fair market values of the bank’s three prime real estate properties which were transferred to PNB Holdings Corp. in exchange for shares. This brought the bank’s consolidated year-to-date net income after provisions and taxes to PhP22.1 billion, 16 times higher compared to its earnings for the same period last year.
Net service fees and commission income grew by 45 percent, boosted by higher investment banking revenues as capital markets resumed momentum in the first half of 2021 as well as increase in volume of credit and deposit-related transactions.
PNB’s net interest income slightly declined by 3 percent to P16.9 billion year-on-year on account of reduced earnings from loans and investment securities, reflective of the continued downtrend in the benchmark interest rates. As of end-June 2021, loan receivables stood at PhP618.2 billion, up by 3 percent from prior year as the bank re-focused its credit granting to entities belonging to financially resilient industries. Deposit liabilities at PhP828.1 billion also increased by 5 percent versus June 2020 levels, driven by steady growth in CASA. Other borrowings of the Bank, on the other hand, declined from year-ago level mainly due to the maturity of the PhP13.9 billion 6.3 percent fixed-rate bonds of the bank in May 2021.
Trading and foreign exchange gains declined by 57 percent to PhP1.6 billion resulting mainly from limited trading opportunities in the market during the period.
As part of its continuing proactive approach to address potential delinquencies from the protracted impact of the pandemic, the Bank booked additional impairment provisions of PhP16.9 billion during the second quarter of the year, bringing the total provisions to-date to P19 billion, higher than the levels seen during the same period last year. As a result, PNB’s NPL coverage ratio increased to 60 percent from 43 percent as of end-December 2020.
Operating expenses, excluding provisions for impairment and credit losses, remained relatively flat year-on-year at PhP13.4 billion as spending was focused on more essential expenditures.
“The Bank delivered excellent results during the first half of 2021 as we were able to sustain profits from core banking operations and reap the benefits of monetizing the value of low income-generating assets. This allowed the Bank to continue to build our loan loss provisions as the pandemic continues to impact local businesses and the overall economy,” PNB President and CEO Wick Veloso said. “As we navigate through this challenging business environment, the Bank’s focus for the rest of the year is to ensure uninterrupted service to its customers. We launched a new Mobile App that is significantly easier to operate and will provide best customer experience. Our web-based account opening platform is now also available to all customers nationwide allowing the public to do banking transactions from the safety of their homes. Our thrust has always been to continuously serve the immediate needs of our customers while looking for innovative ways to enhance their experience.”
As of end-June 2021, PNB’s consolidated resources stood at PhP1.1 trillion, up by 2 percent from year-ago level. The Bank’s Capital Adequacy Ratio of 14.03% and Common Equity Tier 1 Ratio of 13.24% remained well above the minimum regulatory requirement of 10%.
To encourage more customers to stay at home amidst the ongoing health concerns brought by the new COVID-19 Delta variant, PNB waived transfer fees for all purely domestic transactions of InstaPay and PESONet during the Enhanced Community Quarantine from August 6 to August 20, 2021. The Bank continues to deploy its Bank On Wheels to make cash accessible for customers.
In April 2021, the employment-related online platform LinkedIn ranked PNB as #1 in the 2021 LinkedIn Top Companies list in the Philippines, a ranking of the 15 best workplaces to grow one’s career. PNB was also recognized by Asiamoney as Best Bank for Investment Research during its Private Banking Awards in June 2021. The award is a testament to the Bank’s contribution in helping its clients make sound investment decisions by sharing their insights on equities, industries, and the Philippine economy. The award is a milestone for the Bank as this is the first international recognition for its research initiatives. The Bank was also recognized as Best KYC and Customer Onboarding Technology of the Year by The Asian Banker on its Risk Management Awards. The award acknowledges the Bank’s new Anti-Money Laundering Monitoring Solution, showing that the Bank does not rely on a single level of protection but has invested and deployed layers to protect customers and their transactions. Further, the Bank’s “Own a Philippine Home Loan” (OPHL) product was recognized as Mortgage and Home Loan Product of the Year by The Asian Banking and Finance on its Retail Banking Awards. OPHL is a convenient way for overseas Filipinos to apply, book, and pay for loans without the need to fly to the Philippines.