PNB posts 83% profit growth

Philippine National Bank (PNB) said it posted a net income of P1.5 billion for 2007, its strongest finish in 10 years

In a statement, PNB said the 2007 profit marked an 83-percent rise from the 2006 level.

The profit growth was much stronger than the estimated 7- to 8-percent average increase in profit for the entire banking industry last year.

Although low interest rates posed a challenge to the industry’s income potentials last year, the growing demand for loans boosted the banking sector’s growth.

PNB attributed its robust financial performance last year largely to its aggressive lending activities to consumers and small and medium-scale enterprises.
PNB said income from lending posted a double-digit increase despite the low-interest rate environment last year.

“PNB’s foray into the consumer financing business saw motor vehicle loans and housing loans doubling from P836 million to P1.6 billion,” the bank said.
It said fee-based activities, such as channeling overseas remittances, also aided in the attainment of its record profit growth last year.

PNB has 3,000 payment outlets worldwide that service mostly Filipinos sending remittances to their families in the Philippines.

Besides robust growth in profit, the bank was likewise sufficiently protected against slippage to liquidity problems. The bank’s capital adequacy ratio, which measures sufficiency of funds to cover risks that the bank is exposed to, stood at 19.03 percent, higher than the 10 percent required by the central bank.

PNB president Omar Byron Mier said the bank’s financial performance in 2007 was anchored on the company’s efforts to reduce non-performing assets and engage more in its core business, which is lending to small and medium-scale enterprises and consumers.

The government last year sold its remaining 12-percent stake in PNB for about P1 billion.

This is an extract from
Asian Banking and
Finance Magazine.

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