PHILIPPINE National Bank (PNB) is interested in tapping the provisions of the Financial Institutions Strategic Transfer (FIST) Law to clean up its balance sheet, an official said.

“As to the extent, that’s still being determined, but yes, we are interested in selling or transferring our nonperforming assets to take advantage of the benefits to capital,” PNB Executive Vice President and Chief Financial Officer Nelson C. Reyes said in an online briefing on Friday.

The bank is currently in the process of identifying eligible nonperforming loans (NPLs) and assets that can be transferred to FIST corporations that will be established under Republic Act No. 11523.

Siguro (Maybe) the expectation is for the preliminary list of these identified eligible NPLs will be completed some time during the second quarter,” Mr. Reyes said, noting they have started preparing even as the implementing rules and regulations of the new law are still underway.

Enacted in February, the FIST Law allows lenders to sell their NPLs and assets to FIST corporations and also grants tax exemptions for these transactions.

With many ailing businesses and as borrowers remaining cash-strapped due to the crisis, officials hope that financial institutions could be encouraged to lend once they clean up their balance sheets through the FIST law.

Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno earlier said the law could trim banks’ NPL ratio by 0.63 to 7 percentage points. The industry-wide NPL ratio stood at 3.61% as of end-2020.

Both the BSP and the Securities and Exchange Commission have circulated draft guidelines for feedback from concerned industries last month.

PNB’s NPL ratio stood at 6.93% as of end-2020, based on its audited financial statement. PNB Chief Executive Officer and President Jose Arnulfo “Wick” A. Veloso said their restructured loans made up 7.5% of their loan portfolio last year.

He said they will be refocusing their activities moving forward to respond to the changing business landscape caused by the pandemic, adding they will prioritize critical sectors in the new normal.

“These include projects covered by the ongoing infrastructure program of the government just focused on supporting economic recovery efforts. Because next year is an election year, we are expecting increased government spending to push the completion of these numerous infrastructure projects nationwide,” Mr. Veloso said.

He added they are also keen on extending credit to industries engaged in telecommunications, human health and social work activities, hospital activities, retail selling and supermarket, and manufacturing of food products.

PNB’s net income dropped 73.14% to P2.6 billion in 2020 from P9.68 billion in 2019 due to heightened loan loss provisions during the pandemic.

Its shares closed at P23.25 apiece on Friday, down by five centavos or by 0.21% from its previous finish. — L.W.T. Noble