PHILIPPINE NATIONAL Bank (PNB) booked a higher net earnings in the first quarter as lower expenses helped offset a decline in its total operating income.

The Tan-led lender’s net earnings rose by 34% to P1.791 billion in the quarter ending March from P1.337 billion in the same period in 2020, it said in its unaudited quarterly financial statement filed with the local bourse on Wednesday.

This translated to a return on equity of 4.68% as of March, up from 3.53% a year earlier. Return on average assets also improved to 0.61% from 0.49%.

The bank’s net interest income decreased by 6.69% to P8.237 billion from P8.828 billion a year earlier.

Its net interest margin dropped to 3.17% at end-March from 3.33% in the comparable year-ago period.

Meanwhile, net service fees and commission income improved by more than a third to P1.293 billion in the first quarter from P961.542 million on the back of higher credit card-related fees and underwriting fees.

On the other hand, PNB’s other income dropped by 38% to P1.552 billion from P2.512 billion amid lower gains from trading, investment, and foreign exchange

With this, the bank’s total operating income dropped 9.9% to P11.083 billion last quarter from P12.302 billion in the first three months of 2020.

Meanwhile, it reduced its operating expenses by 17.1% to P8.782 billion from P10.597 billion.

This decline was mainly attributed to lower provisions for impairment, credit, and other losses, which stood P2.095 billion, down by 37.5% from the P3.355 billion it set aside in the first quarter of 2020.

PNB’s loans and receivables inched up 1.5% to P609.3 billion as of end-March from P600 billion as of end-2020. Despite the decline in credit, its nonperforming loan ratio stood at 6.37%, higher than the 1.78% a year earlier.

Meanwhile, the bank’s deposit liabilities stood at P847.6 billion as of March, down 4.8% from the end-2020 level. Demand and savings deposits increased by 3.8% and 5.5%, respectively, while time deposits went down by 31.2%.

The bank’s capital adequacy ratio stood at 14.77% as of March, up from 14.72% a year earlier, while its common equity Tier 1 ratio was at 14.11%, also better than the 13.8% seen last year. Both were beyond the minimum regulatory requirements.

PNB’s shares closed at P28.50 apiece on Wednesday, down by 10 centavos or by 0.35%. — LWTN