Asset sale boosts PNB profit by 71%

May 14, 2023 | 12:00am

MANILA, Philippines — Philippine National Bank (PNB) of tobacco and airline magnate Lucio Tan booked a 71 percent jump in earnings to P4.81 billion in the first quarter, boosted by the huge windfall from the disposal of investment properties.

In a financial statement submitted to the Philippine Stock Exchange, PNB said total other income amounted to P3.4 billion from January to March this year, almost 6.5 times the P524.44 million recorded in the same period last year.

Net gains on sale or exchange of assets reached P2.64 billion, almost 19 times than last year’s P139 million.

The windfall came mainly from the sale of major investment properties as part of the group’s strategy to monetize the value of its low earning assets.

PNB disposed investments with a net book value of P1.5 billion in the first quarter of the year and recognized a gain on sale of P2.6 billion.

This was boosted by the improvements in net gains on trading and investment securities, equity in net earnings of an associate and net gains from foreign exchange.

Net interest income jumped by 22.6 percent to P10.45 billion due to higher interest earnings brought about by higher yields on loans, investment securities, deposits with banks and interbank receivables. Net interest margin increased to 4.2 percent from 3.4 percent.

Interest expense likewise increased primarily due to increase in interest cost of deposit liabilities and amortization of transaction costs on bonds payable, offset by decline in interest expense from bills payable and other borrowings.

Net service fees and commission income increased by 24 percent to P1.55 billion due to increases in loan, deposit, credit card and remittance-related, and interchange fees partly offset by decreases in underwriting fees and bancassurance.

PNB’s total operating expenses increased by 12.5 percent to P7.94 billion, mainly due to the taxes related to the property sales.

Meanwhile provision for impairment, credit and other losses reached P1.61 billion versus reversals of P393.53 million as the bank continued its conservative approach in its provisioning due to uncertainties brought about by the rising interest rates.

The assets of the Tan-led bank slipped by 3.1 percent to P1.11 trillion in end March this year.

PNB’s loan book stood at P586.5 billion in end March, while its deposit base reached P833.5 billion.

Its non-performing loan (NPL) ratio improved to 2.7 percent in end March from a year-ago level of 5.3 percent, while NPL coverage increased to 90.1 percent from 60.7 percent.

Tan’s LT Group Inc. has a 59.88 percent stake in PNB. The bank has 651 domestic branches as well as 72 overseas branches, representative offices, remittance centers and subsidiaries in 17 locations in Asia, North America and Europe.