PBB net income down by 25% to P938.9M in 2020

PHILIPPINE Business Bank (PBB) saw its net profit drop by 25.25% to P938.9 million last year due to increased loan loss provisions amid the pandemic.

The lender said in a regulatory filing on Thursday that its net earnings went down from P1.256 billion posted in 2019.

PBB set aside P2.34 billion in loan loss reserves last year for the expected surge in nonperforming loans due to the ongoing coronavirus pandemic. The amount was four times bigger than the P561 million booked in 2019.

“This provisioning will help cushion the bank from the uncertainties surrounding the pandemic. Both the Bank’s core income and pre-tax pre-provision profits improved in 2020, exhibiting the bank’s ability to generate cash earnings, reaching P2.783 billion and P3.533 billion, respectively,” PBB President and CEO Roland R. Avante was quoted as saying.

“The challenge, however, is in managing the bank’s quality of risk assets moving forward,” Mr. Avante added.

The bank’s net interest income grew 23.7% from a year ago to P5.628 billion. This pushed its net interest margin to rise to five percent in 2020 from 4.52% in 2019.

Meanwhile, PBB posted a 41.9% increase in its core income to P2.784 billion last year.

Earnings from trading activities also surged by 156% to P749 million.

The lender’s total loans and receivables likewise went up by 2.3% to P89.3 billion last year.

On the funding side, total deposits grew by 5.4% to P100.4 billion in 2020 from P95.3 billion the year prior.

“PBB took necessary steps to manage risks by adhering to proven lending and account management processes and procedures. A key focus of marketing initiatives was directed towards high-quality accounts: existing clients and borrowers with a track record of sustainable earnings in industries that are able to withstand the impact of the pandemic,” Mr. Avante said.

“Strengthened collection policies, restructuring programs, and the usual focus on deepening relationships with our SME (small and medium enterprises) clients continue to be our primary objectives. We also plan to continue to improve our deposit mix, in anticipation of a tightening margin environment in the core interest differential business,” he added. — B.M. Laforga