PHILIPPINE BANK of Communications (PBCom) recorded a lower net profit in the third quarter amid a decline in its earnings from core businesses and trading losses.

The bank’s net income dropped by 35% to P361.12 million in the quarter from P556.538 million a year ago, based on its quarterly financial report published on Tuesday.

For the first nine months, the lender’s net income decreased by 25.6% year on year to P1.125 billion from P1.512 billion.

PBCom said the decline in its net profit was mainly due to lower operating income amid net trading losses and lower rent and fee income.

The bank’s return on assets declined to 1.44% at end-September from 1.96% a year earlier. Return on equity likewise inched down to 11.56% from 16.7%.

Net interest income slipped by 0.5% year on year to P1.069 billion in the third quarter from P1.074 billion. The bank’s net interest margin improved to 4.26% at end-September from 4.03% at end-December, which it attributed to a decline in the cost of funds.

Fee income dropped by 43% to P77.981 million in the third quarter from P137.569 million in the same period last year.

The bank booked a trading loss worth P66.404 million in the July to September period, reversing the P230.281-million gain it saw a year earlier.

Meanwhile, income from its trust operations improved to 12% year on year to P7.456 million from P6.647 million.

With this, PBCom’s total operating income decreased by 26% to P1.216 billion in the third quarter from P1.647 billion.

Meanwhile, operating expenses in the third quarter decreased by 30% to P720.713 million from P1.037 billion in the same period of 2020.

The bank set aside P13.124 million in credit provisions from July to September, plunging by 95% compared with the P281.826 million seen in the same period in 2020. This brought its loan loss reserves at end-September to P50.098 million, down by 91% from the P538.664 million a year earlier.

PBCom’s loans and receivables stood at P63.405 billion at end-September. The bank’s gross nonperforming loan ratio improved to 4.98% from 5.71% a of end-2020.

Meanwhile, deposit liabilities stood at P82.703 billion at end-September.

PBCom’s assets reached P106.857 billion in the same period, up 5.6% from the P101.23 billion at end-December.

Its capital adequacy ratio was at 17.49% at end-September.

PBCom had 90 regular branches and four branch-lite units as of September.

The bank’s shares were last traded on Nov. 8, closing at P18.48 each. — L.W.T. Noble