"The change in the taxation system, which saw a return from the value added tax system to the gross receipts system, was the biggest non-recurring item that affected the bank’s net income performance in the first half of 2004," PNB said.
The bank has targeted to end the year with a net profit of P205 million. For the second half of 2004, it expects to pick up the pace of its revenue generation performance as its core businesses accelerate in growth.
These include a re-focusing of lending thrust to more profitable segments such as small and medium enterprises (SMEs) and local government units (LGUs), as well as consumer finance. It also plans to launch new products aimed at specific market areas, convert PNB representative offices into full remittance centers, and be more active in cross-selling of group products, including bancassurance.
As of end-June, PNB kept its growth performance on track as total resources grew by eight percent to P216 billion from P199 billion in end-2003.
It said the increase in assets was pushed by the expansion in customer deposits and proceeds from the issuance of Tier 2 capital, which were deployed in trading and investment securities and interbank loans.
"The bank’s first semester performance proves the continued effectiveness of the rehabilitation initiatives which it started to pursue in mid-2002, anchored on the "Good Bank - Bad Bank" strategy," PNB said.
Under the "Good Bank" scheme, deposit liabilities grew by seven percent to P158.238 billion, propelled by the increase in low-cost deposits whose average deposit balance grew by 11 percent.
Trading and investment securities also contributed to the healthy growth in the bank’s asset base, expanding by 12 percent to P51.476 billion.
Initiatives under the "Bad Bank" strategy also boosted efforts to improve the bank’s balance sheet, PNB noted. Through focused work-out strategies aimed at improving asset quality and reducing non-performing accounts, a total of P2.325 billion in loans were restructured, collected and foreclosed during the first half of 2003. Consequently, non-performing loan (NPL) ratio declined to 45.6 percent in June 2004 from 46.4 percent in end-2003.
Total ROPOA (real and other properties owned or acquired) sales, meanwhile, amounted to P1.029 billion, compared to P875 million last year. The bank’s public auctions of foreclosed properties held in various parts of the country such as Tarlac, Batangas, Camarines Sur, Cebu, Bacolod, Davao, Cagayan de Oro, and Zamboanga, as well as the use of other sales channels such as the Internet have effectively expanded the market for PNB’s foreclosed properties.
Despite the overall slowdown in incoming foreign remittances during the first half, PNB’s figure continued to grow to contribute significantly to fee-based income.