The Philippine National Bank (PSE: PNB) registered a consolidated net income of P7.5 billion for the first nine months of 2018, 67% higher compared to its earnings for the same period last year. The strong performance was attributed to the 36% growth in total operating income as core income significantly increased combined with higher non-recurring revenues.
Comprising almost two-thirds of total operating income, the Bank’s net interest income grew by 24% to P20.0 billion from year-ago level of P16.2 billion, driven by higher loan volumes coupled with improving net interest margins. Likewise, net service fees and commission income reached P2.5 billion, P142 million better than year-ago level, boosted by improvements in credit, deposit, and bancassurance fees which buoyed the lower underwriting and investment banking revenues owing to the tempered activities in the capital markets during the period. Trading and foreign exchange gains, however, were down to P1.42billion given muted trading opportunities brought about by the continuing upward movement of interest rates. The Bank booked higher net gains on disposal of foreclosed properties at P4.6 billion during the period as a result of its continuing strategy of reducing non-earning assets. Excluding these non-recurring gains on the sale of foreclosed assets, the growth in total operating income remains high at 18% year-on-year.
Operating expenses, excluding provisions for impairment and credit losses, grew 16% over the same period last year, as strong revenue growth translated to higher business taxes and other business-related expenses. Without taxes and licenses, operating expenses increased by 11%. The Bank also set aside provisions for impairment and credit losses amounting to P1.6 billion for the first half of 2018 in line with its prudent provisioning policy in compliance with new accounting standards.
As of end of September 2018, PNB’s total consolidated resources stood at P910.7 billion, up 9% compared to December 2017 balances, while total equity increased by P6.5 billion to P126.2 billion from 2017 year-end levels. The Bank expanded its loan portfolio to P550.7 billion, up 10% compared to end-December2017 level, while total deposits were higher by 9% to P692.8 billion during the same period. Net non-performing loans (NPL) ratio was at 0.37% while NPL coverage remained more than adequate at 134%. Common Equity Tier 1 Ratio was 14.0% and Capital Adequacy Ratio stood at 14.8%.
In September 2018, the Bank disclosed its integration with its wholly-owned thrift bank subsidiary, PNB Savings Bank (PNBSB). The integration highlights PNB and PNBSB’s aim to strengthen its consumer and SME business, and improve synergy of its branch networks. With the integration, PNB will have a total domestic footprint of 707 branches and more than 1,390 ATMs strategically located nationwide. The Bank maintains its position as the Philippine bank with the most extensive international reach with more than 70 overseas branches, representative offices, remittance centers, and subsidiaries across Asia, Europe, the Middle East, and North America.