PHILIPPINE NATIONAL Bank (PNB) saw its net earnings surge in the second quarter as its income from core businesses improved, rebounding from the levels seen at the height of the coronavirus crisis in 2020.

The lender’s net profit skyrocketed by 3,766% to P20.338 billion in the April to June period from the P52.597 million posted in the same quarter a year ago, based on its financial statement filed with the local bourse on Wednesday.

This brought the bank’s net earnings for the first six months to P22.129 billion, surging from the P1.389 billion booked in the same period of 2020.

This translated to a return on equity of 7.92% as of June, up from 1.81% a year ago, while return on assets also improved to 1.04% from 0.25%.

“The bank delivered excellent results during the first half of 2021 as we were able to sustain profits from core banking operations and reap the benefits of monetizing the value of low income-generating assets,” PNB President Jose Arnulfo A. Veloso said in a statement.

“This allowed the bank to continue to build our loan loss provisions as the pandemic continues to impact local businesses and the overall economy,” he added.

PNB’s net interest income inched up by 0.1% to P8.616 billion in the second quarter from P8.607 billion a year earlier. Its interest earnings dropped 12% to P10.458 billion but was offset by the 43.8% decline in its interest expense to P1.842 billion.

Net interest margin was at 3.24% at end-June, down from 3.5% the year prior.

Its net earnings from service fees and commissions increased by 58.5% last quarter to P1.158 billion from P730.612 million a year earlier “due to higher transactional volumes of loan-related and credit card-related transactions.”

Meanwhile, other income soared to P34.471 billion from P1.803 billion, mainly due to gains worth P33.596 billion after PNB disposed its control of a subsidiary.

“This represents the increase in fair market values of the bank’s three prime real estate properties which were transferred to PNB Holdings Corp. in exchange for shares,” the bank said in a statement.

On the other hand, trading and investment gains declined by 70% to P331.175 million from P1.105 billion a year earlier. Foreign exchange gains also dropped 47.89% to P193.672 million from P371.664 million.

With this, PNB’s total operating income in the second quarter climbed by 297% to P44.246 billion from P11.141 billion a year earlier.

On the other hand, the bank’s operating expenses in the second quarter surged by 112% to P23.622 billion from P11.132 billion. This was mainly caused by higher provisions for credit losses, which jumped by more than four times (233%) to P16.927 billion from P5.077 billion a year earlier and brought the first semester level to P19 billion, equivalent to a 60% nonperforming loan coverage ratio.

PNB’s loans and receivables increased 2.5% to P618.197 billion as of end-June from P602.618 billion in the same period of 2020. The bank’s loan portfolio expanded as it “refocused its credit granting to entities belonging to financially resilient industries,” it said.

Its gross nonperforming loan ratio stood at 11.47% from 4.77% a year earlier.

Meanwhile, deposit liabilities rose by 5% to P828.1 billion as of end-June, mainly backed by steady growth in its current account, savings account deposits.

PNB’s assets inched up 2.5% to P1.109 trillion from P1.082 trillion a year earlier.

The bank’s capital adequacy ratio was at 14.03% at end-June, down from 15.86% a year ago, while its common equity Tier 1 ratio also dropped to 13.24% from 14.99%. Still, these were beyond the minimum regulatory requirements.

PNB’s shares closed at P21.60 apiece on Wednesday, up by P1.10 or 5.37% from its previous finish. — LWTN