November 19, 2014

PNB nets P3.7b in 9M14

In a disclosure to the Exchange, Philippine National Bank (PNB) said that its net income for 9M14 fell 37% to P3.7b. The decline was mainly attributed to last year’s high base, which was buoyed by extraordinary trading gains. Excluding trading gains, the bank’s operating income grew 26% to P18.9b mainly due to the 12% YoY increase in interest income and the 29% decline in interest expense.

This was also due to the 14.6% YoY growth in loans to P290.8b, with the commercial and consumer segments leading the way. Meanwhile, interest expense on deposits steadily decreased in the past quarters, mainly due to improving deposit mix in favor of low-cost deposits. The bank’s NPL ratio improved to 0.99% from 1.4% in end-2013. The Capital Adequacy Ratio (CAR) came in at 21.1%, well-above the BSP’s 10% requirement.

Our take: PNB’s 9M14 results are trailing the 2014 consensus estimate of P6.0b, accounting for only 62% of the figure. While topline growth seemed healthy, it is possible that the underperformance was brought by higher than expected growth in either operating expenses or provisions for losses. It remains to be seen how well the bank would be able to manage the growth of operating expenses and provisions for losses, especially considering that it is in the process of integrating Allied Bank into its fold while also pursuing growth opportunities. – WealthSec