PNB's income surges 59% to P728 million in first quarter

MANILA, Philippines - Philippine National Bank (PNB) jumpstarted its 2009 operations with a strong 59-percent income growth in the first three months, to P728 million, but conceded its merger with Allied Bank will be delayed for at least another year.

“It may take another 12 to 18 months before the two banks are merged,” Omar Byron T. Mier, PNB president and chief executive officer, said during the bank’s annual stockholders’ meeting yesterday.

“Effectively, it’s just the legal issues that’s holding us back,” he said.

The two banks, both controlled by tycoon Lucio Tan, agreed to merge early last year and have sought to formalize the fusion – with PNB as the surviving entity – last December.

When combined, the merged entity will have a branch network of 606, making it the country’s fourth largest bank.

However, Allied Bank has yet to dispose of its 28-percent stake in California-based Oceanic Bank since US monetary regulators wanted to avoid multi-ownership or cross ownership of financial institutions.

“The [US] Federal Reserve told Allied Bank to dispose of their holdings in Oceanic Bank before any merger could proceed,” Mier added.

Oceanic Bank’s net worth may reach anywhere from $32 million up to $35 million, Mier said.

Moreover, US law disallows lenders from operating “parallel banks” within their jurisdiction, a prohibition that has delayed the long-standing merger between PNB and Allied Bank, PNB director Gloria Tan-Climaco added.

In the first three months of the year, PNB boosted its net income to P728 million on the strength of its lending business.

Mier said he is optimistic PNB will continue to grow by double digits in terms of net earnings this year. “That has been our annual average income growth for several years, and we hope to keep it that way.”

Corporate lending grew 89 percent while government lending expanded nine percent. Mortgage lending ballooned 76 percent to P5 billion.

The bank’s consumer lending market makes up 10-percent of its loan portfolio while government lending accounts for 27 percent of the total. Corporate borrowers take up the largest chunk of the lending pie, accounting for 58 percent, while five percent is accounted for by SME lending.