PNB's bad loans rise to 33%

The non-performing loans (NPLs) of Philippine National Bank (PNB) increased to 33 percent as of end-April this year from only 29 percent in end-1999, PNB president Feliciano Miranda Jr. said yesterday.

In a press conference after the bank's annual stockholders' meeting, Miranda said the total loan portfolio for the first four months of 2000, declined to P110 billion from P115 billion in end-December 1999.

Miranda attributed the worsening NPL level to the delayed impact of the Asian financial crisis on the bank's performance.

"Our NPL got worst this quarter since the impact of the (Asian) crisis in the Philippines is now beginning to be felt only this year. There has been delayed reaction as indicated in the closure of an investment bank and a commercial bank. We see more problem accounts industrywide (not only in PNB)," PNB director Enrique Filamor said.

But Miranda pointed out that although PNB reported a substantial NPL level, most of these receivables are secured. Based on the 1999 annual report of the bank, out of the 29 percent problematic accounts of PNB, 75 percent are secured and 25 percent are unsecured.

Miranda said they expect to reduce their bad loans in the remaining months of the year. "We see it tapering off," he said, adding that the bank was also able to cut its losses. As of end-April 2000, the net loss of the bank amounted to less than P230 million, about the same amount recorded in end-March this year.

He said they expect to continue cutting losses, especially if their proposed rehabilitation plan is approved by the Bangko Sentral ng Pilipinas (BSP).

In the rehabilitation program to be submitted to the BSP, PNB sees a break-even or even a P300 million net income in the first year of operation, provided the sale of government's share and Lucio Tan's group in PNB pushes through this June.

Miranda said they project about 10 percent growth in earnings in the second year of rehabilitation of the bank.

"But, we have to wait for the ownership issue to be resolved first before we could implement this rehabilitation plan," he said.

Part of the plan is to raise about P5 billion to P6 billion additional capital for the bank through the issuance of preferred shares or a rights offering.

Miranda also assured that PNB would remain a government depository bank until 2003. Of PNB's P164.5 billion deposits as of end-1999, 32 percent belonged to the government and the remaining 68 percent were private depositors.

During the annual meeting, a new set of directors was elected to the PNB board. All the nominees of the government and the Lucio Tan group were accepted to the board despite objections from some stockholders.

The government nominees in the PNB board include: PNB chairman Andres Narvasa, PNB president Miranda, former Labor Secretary Nieves Confesor, Vice President Gloria-Macapagal Arroyo's sister Cielo Salgado, and Roberto Marquez.

Tan's representative to the board are himself, Enrique Filamor, former Allied Bank director Florencio Santos and Macario Te.

Representing the Templeton Asset Management Group of Hong Kong is Roberto Romulo while the private sector representative to the board will be Washington Sycip.

Aside from the nomination of two more directors to the board which was rejected, most of the items in the agenda of the annual meeting were contested by the minority stockholders such as the right of the chairman to appoint directors, and the appointment of Sycip, Gorres and Velayo as the bank's external auditor.

The minority stockholders also questioned the bank's performance and deteriorating share prices in the local stock market.