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Lucio Tan-led Philippine National Bank (PNB) saw a 34% increase in its net income to P1.8 billion in the first quarter of 2021, according to a report by GMA News.

In a disclosure to the Philippine Stock Exchange on Friday, PNB said the earnings growth is attributed primarily to improvements in net service fees and commission income, reduced operating expenses, and significantly lower provisions for credit losses

During the January to March period, the bank said it booked P2.1 billion in provisions for credit losses, lower by 38% compared to the year-ago level of P3.4 billion.

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The lower provisioning level resulted from the anticipatory build-up of provisions for most part of 2020 as a proactive approach in addressing potential delinquencies that may arise from the impact of the prolonged pandemic, the lender said.

Net service fees and commissions, meanwhile, grew 35% on the back of higher fees from underwriting activities as well as credit cards and bancassurance businesses.

Operating expenses, excluding provisions for impairment and credit losses, declined 8% over the same period last year due to sustained rationalization of non-essential expenditures as well as operational efficiencies as the bank transitions to more automation and technology-driven processes to adapt to the demands of the new normal.

PNB’s net interest income declined 7% to P8.2 billion on account of reduced earnings from loans to corporate, commercial and small and medium enterprises, alongside investment securities, reflecting the downward trajectory of benchmark interest rates beginning the second quarter of 2020.

Loan receivables stood at P609.3 billion as of end-March 2021, lower by 6% from prior year owing to weak loan demand combined with the bank’s continued focus on strengthening its liquidity position amid lingering economic uncertainties.

Deposit liabilities in contrast increased by 7% to P848 billion from March 2020 levels, driven by steady growth in low cost current account/savings account (CASA).

Other income declined by 38% to P1.6 billion resulting mainly from lower trading income due to limited trading opportunities in the market.

”We continue to be vigilant of the effects of the economic fallout from COVID-19 on the bank’s operations and businesses. It is for this reason that PNB continues to adopt a prudent approach in asset deployment which affected the bank’s net interest margins,” said PNB president and CEO Wick Veloso.

“However, we remain confident that such strategy together with the tactical actions we are taking will ensure that the bank will be able to emerge from the crisis stronger. Along this line, we have also undertaken initiatives to improve the bank’s services in the digital space,” Veloso said.


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