Philippine Business Bank (PBB) deemed it necessary to heighten the provisions for potential credit losses by more than three times in the first half after reviewing its loan portfolio.
The listed bank said in a disclosure on Thursday it allocated P550 million in loan loss reserves in the first half, higher than the P150 million earmarked in the same period last year.
PBB shares ended flat at P8 each amid the 1.18-percent growth for the main index on Thursday.
“As a result of a thorough portfolio management and review processes of the Bank, PBB deemed it prudent to provide P550.0 million in loan loss reserves for the first half of 2020,” PBB President Roland R. Avante said.
Despite the hike in credit buffer, the banking arm of the Zest-O Group of Companies saw its net income rise by 37.2 percent to P794.9 million in the first semester from last year’s P578.9 million.
Interest income climbed by 14 percent to P3.73 billion while core income doubled to P1.37 billion year-on-year in the first half.
Total assets as of end-June rose by 14.3 percent to P114.8 billion from last year’s P100.5 billion. Of this amount, P84.2 billion is accounted by total loans and receivables.
On the funding side, deposit liabilities stood at P95.1 billion in the first semester.
Total equity reached P14 billion for the period, translating to P20.85 book value per share net of preferred stocks.
Net interest margin accelerated to 5.04 percent in the first half from 4.11 percent in the previous year. Return on average assets and return on average equity stood at 1.39 percent and 11.81 percent, respectively.
“Even as market conditions continue to be challenging, our good balance sheet position allowed us to deliver robust core income and [pre-tax pre-provision profit],” Avante said.
He added that the bank remains committed in providing liquidity for the small and medium enterprises via “well-structured financing” to jumpstart the economy.
The merger of PBB and Insular Savers Bank, the former being the surviving entity, was greenlighted by the Securities and Exchange Commission in June last year. Their merged operations began a month after the approval.