THE Philippine National Bank (PNB), the lender led by tycoon Lucio Tan, posted a 63-percent decline in its net income in 2022.
In a disclosure to the Philippine Stock Exchange (PSE), PNB reported that its net income reached P11.6 billion, lower than its net income in 2021.
The country’s sixth-largest bank by assets said its net income in 2021 was significantly higher due to one-time gains. However, the bank said, its total operating income grew by 19 percent from 2021.
“In 2021, the bank reported a one-off gain coming from the properties-for-shares swap transaction implemented that year, which significantly increased the prior year net income by P33.3 billion. This caused the comparative net income in 2022 to be lower by 63 percent,” PNB said in a statement.
However, PNB said that without the effect of its one-off gain, its pre-tax income showed a growth of 3.5 times year-on-year on the back of stronger core operating income in 2022.
PNB said the double-digit growth in its total operating income was driven by “sustained growth in core income and supplemented by substantial gains on disposal of the bank’s low-earning foreclosed properties.”
Apart from this, PNB said it also concluded several sale transactions involving high-value foreclosed properties in 2022, which generated net gains on sale and exchange of P7.8 billion during the year, almost 8-times higher than the gains recorded in 2021.
“PNB improved its efficiency and profitability amidst challenging conditions and economic headwinds,” said PNB Acting President Florido P. Casuela. “PNB’s performance in 2022 is a good indicator that the Bank continues to deliver real value to our clients, investors and the overall economy.”
PNB also reported that amid the rising interest rate environment in 2022, its net interest income reached P37.3 billion, up by 7 percent year-on-year due to higher yields on interest-earning assets.
This translated to the bank’s net interest margin improving to 3.61 percent from 3.27 percent a year ago. Its core income was boosted by the 5 percent growth on its fee-based revenues largely coming from fees on its deposits, bancassurance and underwriting transactions.
Further, gains from foreign exchange transactions expanded to P1.6 billion, up by 116 percent year-on-year. These gains cushioned the impact of trading losses recorded in 2022 amounting to P1.3 billion with the uptrend in interest rates, brought about by the global monetary tightening during the year.
“Operating expenses posted a moderate increase of 8 percent year-on-year on account of the taxes related to the property sales, as well as higher amortization costs for the leased properties of the bank where it is currently holding its operations. These properties were the subject of the properties-for-shares swap executed in 2021,” the bank explained.
PNB’s gross loan portfolio settled at P613.6 billion as of end-December 2022, lower by 3 percent from prior year’s level.
Credit provisions on the loan accounts are 44 percent lower than year-ago level arising from improvements in payment and credit status in 2022 of certain large exposures of the Bank.
On the funding side, the lender’s deposit liabilities likewise were reduced by 3 percent mainly due to its strategy to trim down higher-cost time deposits.
However, PNB said this decline was tempered by the continued build-up of its current and savings deposits, which together grew by 4 percent year-on-year.
Consequently, total resources of the Bank stood at P1.15 trillion by end-2022, 4 percent lower compared to previous year’s balance.
Despite the economic challenges in 2022, the Bank’s equity remained robust as it increased by 5 percent year-on-year, bringing the Bank’s Capital Adequacy Ratio to 15.38 percent and Common Equity Tier 1 Ratio to 14.58 percent.