PHILIPPINE BANK of Communications’ (PBCom) net income dropped by 42% in the first quarter on lower earnings from its core business and net losses from trading activities.

PBCom said in a regulatory filing on Tuesday that its net income last quarter dropped to P259.136 million from P448.662 million in the same period in 2020, mainly due to the 24% decline in its operating income.

The bank saw its overall operating income fall to P1.146 billion last quarter from P1.515 billion a year ago.

Its net interest income dropped by 24% to P994 million from P1.02 billion as its loan book and investment yields declined.

Meanwhile, PBCom posted a net loss of P144.5 million from its trading activities, a turnaround from the P158.7-million gain it logged in the same quarter a year ago.

Its net profit margin went down to 22.61% from 29.61% in the first quarter of 2020.

The bank’s total loans and other receivables was almost steady at P57.43 billion against the P57.624 billion a year ago. Its non-performing loans made up 5.79% of its portfolio at end-March from 3.63% in the same period last year.

Meanwhile, PBCom’s operating expenses fell 23% year on year to P761.1 million from P993.7 million.

“Total operating expenses went down mainly because of lower provisions for losses recognized in the current period. Lower compensation costs from lower headcount and decline in taxes and licenses from lower GRT (gross receipts tax) also contributed to the drop in operating expenses,” the bank said.

On the funding side, PBCom posted P81.25 billion in deposit liabilities last quarter, down by three percent from P83.78 billion the year prior.

The bank’s risk-based capital adequacy ratio stood at 18.5% in the first quarter, higher than the 16.81% a year ago. It recorded a return on equity of 2.07%, down from 3.91%.

“The bank has experienced an increase in past due levels in loans due to the outbreak of COVID-19. This necessitated an increase in loan provisions. However, a gradual pick up in business activity is expected as the government gradually relaxes the quarantine measures,” PBCom said.

Shares in PBCom went down by 1.14% or 25 centavos to P21.75 each on Tuesday. — Beatrice M. Laforga