The bank attributed last year’s performance to improved net interest margin, fee-based income and operating expense management. The gains were realized after PNB pursued the "Good Bank – Bad Bank strategy" that gave it more focus.
Under the strategy, new initiatives intended to tap new markets and grow the bank’s business were pushed while at the same time winding down and managing its non-performing assets in the most advantageous and profitable manner.
PNB’s net interest income substantially improved to P1.64 billion for 2003, from the previous year’s P509 million, on the back of higher interest income of P7.34 billion from P6.81 billion and lower interest expense of P5.70 billion from P6.30 billion.
The higher net margin resulted from the bank’s active campaign to expand its low-cost deposit base and by aligning the pricing of loans and deposits to market levels.
Collections on past due accounts as a result of focused restructuring initiatives also contributed substantially to the improved margins.
To raise more low-cost funds, the bank’s retail banking sector introduced innovative products, such as the Priority One Checking Account for high networth clients and the ATM-based First Access savings account, which generated new deposits of P1.23 billion.
The bank also successfully launched and completed a year-long promo to encourage OFWs and their beneficiaries to increase their deposit balances, resulting in the growth of OFW deposits by 30 percent or P1.22 billion in incremental average daily balance, as well as an internal deposit campaign among employees, which raised fresh CA/SA of P9.5 billion.
Total deposits grew by P11.17 billion or eight percent to reach P148.29 billion at the end of the year.
Fee-based and other income increased by P285 million to P4.92 billion from last year’s P4.63 billion. The growth came largely as a result of the bank’s aligning its service fees with market rates.
Aside from these adjustments, the bank’s remittance income was buoyed by the establishment of new offices in the US, Canada, Japan, and Hong Kong and the relocation of Singapore branch to the more popular Filipino hub; Lucky Plaza, as well as remittance tie-ups forged by PNB Hong Kong with 7-Eleven and Bank Mandiri. This latter tie-up has made it possible for the remittances from the Hong Kong, and provides a model for similar partnerships in other parts of the world.
Total OFW and other individual remittances served by the bank for 2003 increased to $2.30 billion from $2.17 billion the previous year.
Meanwhile, implemented sales of foreclosed assets increased substantially to P2.4 billion from last year’s P1.9 billion. This is a result of initiatives to expand and actively manage sales distribution channels for such assets, including those involving branches, in—house units and affiliates, and brokers, as well as the monthly auctions.