Philippine National Bank (PNB) posted an operating profit, before credit provisions and taxes, of P14.1 billion in the first nine months of 2020, 42 percent higher than the same period last year, spurred by sustained growth in its core banking activities.
For the nine-month period, the bank’s net interest income increased by 12 percent year-on-year to P26.2 billion, driven by lower funding costs due to the stable growth in low-cost deposits combined with the significant reduction in levels of high-cost deposits, particularly with the maturity of P7.0 billion worth of Long-Term Negotiable Certificates of Time Deposit (LTNCDs).
Loans and receivables as of end-September 2020, however, declined from 2019 year-end level as the Bank focused on strengthening its liquidity position.
To remain resilient during the pandemic, the bank fortified its liquidity management and invested most of the available funds in short-term and more liquid placements.
As a result, current ratio of the bank as of end-September 2020 increased to 65 percent from 59 percent as of year-end 2019.
“Our performance this quarter continues to show improvements in core income despite the Bank’s prudent approach in asset deployment amidst the difficult operating environment. Our strategies, backed by a strong franchise and loyal customer base helped the Bank adapt to the pandemic conditions,” PNB President and CEO Wick Veloso said.
“We look forward to seeing greater opportunities for PNB to help support our customers as they navigate through the pandemic. We continue to enhance our capabilities so that we are able to play a more active role in rebuilding the economy,” he added.
During the nine-month period, the bank also recorded significant increase in net trading securities gains amounting to P3.4 billion, higher by 227 percent year-on-year as the bank took advantage of favorable market opportunities during most part of the year.
Operating expenses, excluding provisions for impairment and credit losses, remained flat at P20 billion despite the supplemental costs for frontline employees supporting the bank’s operations during the quarantine period as the pandemic conditions provided opportunities to rationalize non-critical expenditures.
When the COVID-19 outbreak started to impact businesses in March this year, the bank took a pre-emptive approach on its loan provisioning and started building loan loss reserves in anticipation of the increase in non-performing loans from borrowers who were affected by the pandemic.
To date, the bank has recognized impairment provisions amounting to P9.0 billion, which is 6 times higher than the amounts set aside during the same period last year.