Wider margins, lower loan provisions boost PNB profit

February 27, 2024 | 12:00am

MANILA, Philippines — Wider margins and lower provisioning for potential loan losses helped boost the profit of Philippine National Bank (PNB) by 55 percent to P17.97 billion in 2023.

PNB president Florido Casuela said in a statement the bank’s performance in 2023 is a testament to efforts in upholding its vision of being among the top banks in terms of customer growth and satisfaction as well as return on equity.

“We have made it our mission to promote financial prosperity for all Filipinos and their businesses, locally and internationally. Apart from providing financial solutions to our customers, we have made it our purpose to empower them by helping build a competitive, inclusive, and sustainable economy,” Casuela said.

The bank’s return on equity improved to 10 percent in 2023 from the seven percent in 2022.

Net interest income increased by 19.4 percent to P44.59 billion as net interest margin widened to 4.2 percent from 3.6 percent.

PNB reported a five percent rise in gross loans to P643 billion as it expanded its lending to the commercial sector, particularly small and medium enterprises (SMEs).

The bank’s deposit base went up by 6.5 percent to P927.97 billion in 2023 as it continued to build up its current and savings accounts (CASA) portfolio.

Total other operating income declined by 18.9 percent to P7.44 billion as net gains on sale of assets fell by 41.9 percent to P4.54 billion.

The bank’s net foreign exchange gains decreased by 15 percent to P1.37 billion, while earnings from services fees and commissions slipped by 5.8 percent to P6.59 billion.

On the other hand, trading and investment securities gains reached P394.1 million in 2023, reversing the P1.28 billion losses in 2022, as PNB capitalized on market opportunities despite the limited market liquidity and rising interest rate environment.

According to PNB, the healthier performance in 2023 was augmented by lower provisions on distressed loans and other credit assets as the market continued to rebound during the year from the lingering effects of the pandemic and other adverse market conditions in recent years.

The bank’s provisioning dropped by 17.7 percent to P5.92 billion in 2023 from P7.2 billion in 2022.

Operating expenses remained almost flat at P28.43 billion in 2023 due to prudent spending despite the continued business growth.

As a result, the bank’s cost efficiency ratio improved to 50 percent from 54 percent.

As of end-2023, PNB’s asset base inched up by six percent to P1.21 trillion, increasing by six percent from the previous year’s level, buoyed by higher loans and investment portfolio.

Meanwhile, the bank’s capital grew by 13 percent to P191.15 billion resulting in stronger common equity tier 1 ratio and capital adequacy ratio of 16.85 percent and 17.7 percent, respectively.