PNB income up 22% to P889 million in Q1

MANILA, Philippines - Philippine National Bank reported a 22-percent growth in net income in the first three months of 2010 to P889 million from P728 million in the comperative period last year.

Total deposits reached P209.1 billion, with low-cost deposits growing by P1.5 billion during the first quarter of the year as a result of intensified marketing efforts. 

Consolidated resources, however, fell slightly to P283.3 billion as of end-March 2010, slightly lower than P284.5 billion at end-2009. This was mainly due to the slight dip in outstanding loans and receivables by 1.2 percent following the scheduled paydowns by large borrowers during the first quarter of 2010.

“A confluence of factors contributed to the growth in profitability: lower cost of funds in tandem with a year-on-year increase in low cost deposits; gains on trading and investment securities; and reduction in operating costs with efficiencies being realized out of investments in technology, reengineering of processes, and prudent risk management,” it said in a statement.

Operating expenses fell 15.9 percent despite the incremental investments in branch rationalization and renovations, technology and staff development. Impairment and credit losses reached P256 million.

Cost efficiency ratio thus improved to 64.5 percent from 69.9 percent in the same period last year. 

A more favorable funding mix also contributed to the profit growth in the first three months of 2010. The increased share of low-cost deposits to total deposits and redemption in February 2009 of P3 billion Lower Tier 2 notes issued in February 2004 reduced funding costs. 

Asset quality continued to improve with the reduction in non-performing loan (NPL) ratio from 7.8 percent to 6.2 percent year-on-year. NPL cover stood at 82.2 percent as of end-March 2010.

The risk-based capital adequacy ratio of 18.4 percent remained one of the highest in the industry and was well above the 10-percent minimum requirement of the Central Bank. Stockholders’ equity increased three percent to P28.7 billion.

In 2009, the former government financial institution reported net earnings ballooning by a hundred percent, from P1.1 billion in 2008, to P2.2 billion.

Deposits in that period expanded to a record P215 billion while loans grew 14 percent. Net interest income expanded to P7.8 billion.

Late last year, PNB and sister bank Allied Banking Corp. took control of Allied Commercial Bank in Xiamen, China. That will make them the first Philippine banks to have full control of a locally incorporated commercial bank.