Thursday, 20 August 2009

Allied Bank’s first-half profit up 20%

Erik de la Cruz
Business Mirror

ALLIED Banking Corp. posted a net income of P514.3 million for the first half of 2009, up 20 percent over the year-ago profit of P428.7 million, as net interest income swelled by 44 percent.

The gains from lending operations offset the impact of weaker income from charges and fees and foreign-exchange gains.

The Lucio Tan-owned bank, which is moving toward a merger with Philippine National Bank (PNB), said its net income in the second quarter surged 178 percent to P366 million, from P131.4 million in the same period last year.

First-half net interest income rose to P3.36 billion from P2.32 billion last year.

“Net interest income...swelled by P548.517 million [47.1 percent] due to the increase in loans and receivables by P387.725 million [32.91 percent] and deposits with banks and interbank loans by P55.274 million [35.11 percent],”Allied said in notes accompanying its results.

The bank’s asset base expanded by 15.3 percent to P183.1 billion as of end-June, reflecting increases of 20 percent in loans and receivables and 22 percent in investment securities.

Deposit liabilities increased by P15.9 billion, or 29 percent.

Allied Bank’s capital adequacy ratio, which measures capital strength against risk-weighted credit exposures, stood at 17.59 percent as of end-June, well above the minimum regulatory requirement of 10 percent. But nonperforming loans (NPLs) increased by P512.85 million, or 26.6 percent, to P2.44 billion, pushing its NPL ratio higher at 2.51 percent as of end-June from 2.18 percent a year before.

Of the total NPLs, only around P700 million were covered by allowance for impairment. For the first half, the bank booked P232.5 million in provision for impairment and credit losses, substantially higher than the P1.46-million provision made for the same period last year.

If Allied and PNB merge now, the group will be the fifth largest in assets. PNB had total assets of P274.6 billion as of end-June.

Their combined assets of P430.7 billion were short by P40 billion compared with current fourth-placer Land Bank of the Philippines, which reported total assets of P471 billion as of end-June.

PNB and Allied previously had seen themselves becoming the fourth largest banking group in the country, with PNB—now the fifth-largest—as the surviving entity. The three biggest in assets as of end-June were Banco de Oro Unibank, Metropolitan Bank & Trust Co. and Bank of the Philippine Islands.

There are more than 30 regular and expanded commercial banks in the country, with the top three accounting for around 40 percent of the Philippine banking system’s total resources.

Early this month PNB president and chief executive officer Omar Byron Mier said the merger might finally be legally done within the next six to nine months.

The merger was supposed to have been completed by the middle of this year, but was delayed because of the need to comply with US banking regulations requiring Allied to divest its 28-percent equity share in California-based Oceanic Bank prior to merger.

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