PNB profit up 35% to P425M

The Lucio Tan-owned Philippine National Bank (PNB) recorded a net income of P425 million in the first six months of the year, roughly 35 percent better than the P315 million profit it made in the same period in 2005.

The favorable results prompted bank officials to express optimism the bank would hit its original full year 2006 net earnings target of P760 million. Last year, PNB posted a turnaround with a net income of P627.5 million coming off negative figures in the previous years due to huge bad debts.

"We are fully confident of hitting 2006 income targets even if we are in a better position based on the first semester figures," PNB president and chief executive officer Omar Byron T. Mier said in a press briefing yesterday.

Mier added that the income performance would not affect the P1.6 billion total provisioning for probable losses for 2006. So far, P900 million had been set aside in the first half of the year and another P700 million will be set aside in the second semester.

Part of the bank’s optimism is the planned sale of between P8 billion to P10-billion worth of non-performing loans (NPLs) under the extended Special Purpose Vehicle (SPV) law.

At the start of the year, PNB’s total non-performing assets (NPAs) was placed at P55 billion, of which P28 billion are real and other properties owned or acquired (ROPOAs) and P27 billion in NPLs.

Within the week, PNB will hold an international roadshow for its $300-million hybrid Tier 1 issue, which will have a 10-year maturity period. Net interest is placed at roughly 10 percent callable in five years, with an extension of another five years depending on market response.

ING Bank is the lead arranger while selling agents include ING Bank, First Metro Investment Corp., Multinational Bancorporation, and PNB.

The hybrid Tier 1 issue will further improve PNB’s capital adequacy ratio (CAR) to around 22 percent from its present consolidated ratio of 17.2 percent.

"We also have the option of raising it to $500 million as originally approved by the Bangko Sentral ng Pilipinas (BSP)," Mier added.