Philippine National Bank First Half 2014 Operating Results
The Philippine National Bank (PNB) reported a net income of Php 3.2 billion for the first six months of 2014, 39% lower than last year’s Php 5.3 billion mainly due to the extraordinary trading gains booked a year-ago. Sustained growth in the Bank’s core business resulted in a net interest income rising by 39% to Php 8.4 billion. Interest income on loans and receivables increased by 18% to Php 7.4 billion, supported by a steady growth in its loans portfolio particularly consumer loans. On the other hand, interest expense declined by 65% to Php 1.8 billion with the redemption of the Bank’s high interest-bearing Long-term Negotiable Certificate of Deposits and Unsecured Subordinated Debt amounting to Php 3.25 billion and Php 11.5 billion, respectively.
Fee-based income contributed Php 1.3 billion to the Bank’s revenue stream, fueled by the expansion of the remittance business and rationalization of fees and charges on Bank services. To further boost the Bank’s net service fees and provide a more convenient way for Filipinos abroad to send money back to the Philippines, PNB has partnered with US-based Wells Fargo & Company last July 2014. Wells Fargo has an extensive network of more than 9,000 stores and 12,500 ATMs across 39 states in the US. Recognizing its exceptional performance in terms of remittance volume, the Bangko Sentral ng Pilipinas (BSP) awarded the Bank as the Outstanding Philippine Payments and Settlement System (PhilPass) REMIT Participant during the BSP’s 2014 Awards Ceremony and Appreciation Lunch for BSP Stakeholders in July.
PNB ended the first half of the year with consolidated assets reaching Php 601.8 billion. Asset quality continued to improve. Non-performing loans net of valuation reserves settled at Php 3 billion as of June 30, 2014 with net NPL ratio at 1.2%.
The Bank’s capital position remained solid. In the first quarter of the year, PNB successfully generated Php 11.6 billion in fresh capital from its stock rights offering, indicative of the Bank’s stockholders full confidence on the long-term prospects of the Bank. By end-June 2014, the Bank’s consolidated equity stood at Php 89.3 billion translating to a capital adequacy ratio (CAR) of 18.8% and Tier 1 ratio of 15.5%, well within regulatory limits.
Last March 2014, Standard & Poor’s Ratings Services hiked its outlook on PNB from “stable”; to “positive”;, citing the gradual improvement in its asset quality following the merger with Allied Banking Corporation. In addition, Moody’s Investors Service also raised PNB’s credit rating outlook from “stable”; to “positive”; last May 2014, affirming PNB’s Ba2/NP local and foreign currency deposit ratings which reflects the ongoing improvements in the credit profile of the Bank.