AIMING to infuse additional liquidity, the Philippine National Bank (PNB) said it plans to transfer its nonperforming assets (NPAs) to an asset management company or special purpose vehicle.
PNB Chief Financial Officer Nelson C. Reyes told the reporters in a recent news briefing that the Tan-led bank is interested in exercising the Financial Institution Strategic Transfer (FIST) Act, which was signed into law last February.
The law, Republic Act 11523, allows financial institutions to unload their NPAs by selling them to asset management firms to better handle their debt portfolio. NPAs refer to nonperforming loans (NPL) and real and other properties acquired in settlement of loans.
“We are interested in selling or transferring our nonperforming assets to FIST [company] to take advantage of the benefits to capital this would bring,” Reyes said.
Reyes said that PNB is currently in the process of identifying the eligible NPAs that the bank can sell to a FIST company. The bank intends to complete this task by the second quarter of the year.
“Processes are being put in place and reviewed for organized and smooth transfer of accounts to FIST.”
According to its financial report, PNB’s gross NPL ratio surged to 6.99 percent in 2020 from 1.59 percent year-on-year. Net NPL ratio, meanwhile, climbed to 6.93 percent last year from 0.68 percent in 2019.
This led to PNB hiking credit loss provisions for 2020 by over five times to P16.9 billion year-on-year. The bank said it earmarked loan loss reserves for essential industries which were heavily affected by the pandemic, including real estate, transportation, wholesale and retail trade.
PNB President Jose Arnulfo A. Veloso said that 7.5 percent of the bank’s loan portfolio has been restructured.
Out of PNB’s total consumer loans, 30 percent availed the debt moratorium under RA 11469, or the Bayanihan 2 law. Eight percent of the institutional banking accounts, meanwhile, sought for the deferral of loan payments as well under the same law.
The loan portfolio of PNB fell by 9 percent to P600 billion last year.
This year, Veloso is “very optimistic” for the operations of PNB, pegging the profit guidance at 51-percent growth. This projection is a major turnaround considering the bank saw its net earnings for 2020 plummet by 73 percent to P2.6 billion from P9.8 billion year-on-year amid heightened credit loss provisions.
“PNB’s net income is projected to steadily increase in 2022-2023, supported by improvement in net interest income with higher income contribution from loans as growth is anticipated at double-digit, coupled with increase in yield rates,” the PNB chief added.
The bank is also setting aside around P5 billion in capital expenditures for this year, bulk—or P3.5 billion—of which is earmarked for digital initiatives. The remaining P1.5 billion is for other projects, including improvement of premises.
Consolidated assets by the bank stood at P1.2 trillion as of end-December 2020. Capital adequacy ratio and common equity tier 1 were at 15.14 percent and 14.47 percent, respectively.
Branch operations
MEANWHILE, the PNB said effective March 22 up to April 16, the lender’s nationwide branch banking hours (except for mall-based and NAIA branches) shall be from 9:00 a.m. to 2:00 p.m. “due to the reported increase in the number of Covid-19 cases in the country.”
“We encourage our clients to plan their banking transactions accordingly,” the bank’s advisory read. The advisory added that the PNB Internet banking and PNB mobile banking app are available for day-to-day banking activities.”
PNB added its “Bank On Wheels” will be rolled out to service areas where there are no automated teller machines (ATMs). PNB said its 1,721 ATMs and “cash accept machines will continue to serve you.”