Tuesday, 12 May 2009

Philippine National Bank net income in ’09 seen best in 7 years

Erik de la Cruz
Business Mirror
http://www.businessmirror.com.ph/home/banking-a-finance/10103-pnb-net-income-in-09-seen-best-in-7-years.html

THE Philippine National Bank (PNB) on Monday said its first-quarter net income jumped 59 percent from year-ago level to P728 million, making it optimistic that 2009 will see the bottom line figure hitting the highest level in seven years.

It gave no exact figure for the full-year forecast. The bank earlier posted a 25-percent decline in net income last year to P1.12 billion due mainly to mark-to-market losses in investments.

“The upsurge in profitability came on the strength of sustained volume growth in its core businesses, improved yield profile and effective management of risks,” the bank, the country’s sixth-largest in assets as of end-2008, said in a statement. Total assets, however, fell to P276.2 billion as of end-March, from P276.8 billion a quarter-ago.

Lending increased by 31 percent, boosting net interest income by 61 percent to P2.1 billion. Deposits increased by 11 percent to close to P200 billion.

Net gains from foreign-exchange transactions surged 172 percent to P1.6 billion, and PNB said this offset the effect of mark-to-market losses on investment securities.

The bank said earnings improved despite the rise in operating expenses, which include a “significant” retirement expense following its implementation of an early retirement program which began in December 2008. No figures were disclosed.

The bank has begun offering a retirement package to its employees ahead of its merger with Allied Banking Corp. Both banks are controlled by tycoon Lucio Tan.

Provisions for impairment and credit losses were also increased by P265 million as it took a “conservative” stance in evaluating its loan portfolio.

Further provisioning was a “well-placed” move, the bank said, “as the local economy remains vulnerable to adverse developments following the global financial crisis.”

Its nonperforming-loans ratio improved to 7.8 percent as of end-March, reflecting the reduction in bad loans by close to P1 billion to P9.8 billion as of end-March.

The bank registered a capital-adequacy ratio—a measure of capital expressed as a percentage of risk-weighted credit exposures—of 18.1 percent, well above the minimum regulatory requirement of 10 percent.

PNB said its merger with Allied Bank was still awaiting regulatory approvals which are contingent on the completion of Allied Bank’s divestment of its 28-percent equity share in California-based Oceanic Holding (BVI) Ltd., which wholly owns Oceanic Bank Holding Inc. prior to the merger.

The merger was supposed to be completed by end-2008 but was pushed back by six months due to regulatory issues.

“Even with the delay, both banks have made significant progress to fast-track the integration process,” PNB said.

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