Philippine National Bank, the fifth-largest lender in terms of assets controlled by tycoon Lucio Tan, is eyeing a new banking license from the Bangko Sentral ng Pilipinas to open and operate a digital bank.
The PNB board of directors on July 7 approved and confirmed the conversion of Allied Integrated Holdings Inc. (formerly PNB Savings Bank) into a digital bank, subject to regulatory and other necessary approvals.
“We wish to clarify to the exchange that notwithstanding the conversion of Allied Integrated Holdings Inc. as the corporate entity for the digital bank, the bank will still apply for a new banking license under BSP Circular No. 1105 dated Dec. 2, 2020,” PNB said in a disclosure to the stock exchange Monday.
The PNB informed the PSE on June 25 of its plan to put up a digital bank. It revised the disclosure to “clarify the disclosure submitted on July 7, 2021 regarding the establishment of a digital bank.”
PNB president and chief executive Jose Arnulfo Veloso earlier said the bank would push for digitization amid the global health crisis.
He said that as the pandemic inevitably reshaped how businesses were conducted and transformed customer behavior, PNB would focus on exploring new opportunities, particularly in the digital space, that would translate into new revenue streams for the bank, while mitigating the risks arising from operating in the new normal.
PNB’s net income in the first quarter climbed 34 percent year-on-year to P1.8 billion, on strong service fees and commission income, reduced operating expenses and significantly lower provisions for credit losses.
JJulPNB booked P2.1 billion in provisions for credit losses, lower by 38 percent than P3.4 billion a year earlier. The lower provisioning level resulted from the bank’s anticipatory build-up of provisions for most part of 2020 as a pro-active approach in addressing potential delinquencies that might arise from the impact of the prolonged pandemic.
Net service fees and commissions rose 35 percent on the back of higher fees from underwriting activities and credit cards and bancassurance businesses.
Operating expenses, excluding provisions for impairment and credit losses, declined 8 percent over the same period last year on sustained rationalization of non-essential expenditures and operational efficiencies as the bank transitions to more automation and technology-driven processes to adapt to the demands of the new normal.
PNB’s net interest income declined 7 percent to P8.2 billion on account of reduced earnings from loans to corporate, commercial and small and medium enterprises, alongside investment securities, reflecting the downward trajectory of benchmark interest rates beginning the second quarter of 2020.
Loan receivables settled at P609.3 billion as of end-March 2021, down by 6 percent from the prior year owing to weak loan demand combined with the bank’s continued focus on strengthening its liquidity position amid lingering economic uncertainties.
Deposits increased by 7 percent to P848 billion from March 2020 levels, driven by steady growth in low-cost CASA (current and savings account).
Other income declined by 38 percent to P1.6 billion, resulting mainly from lower trading income due to limited trading opportunities in the market.
PNB’s consolidated resources reached P1.1 trillion as of end-March, up by 4 percent from a year ago. Its capital adequacy ratio of 14.77 percent and common equity tier 1 ratio of 14.11 percent remained above the minimum regulatory requirement of 10 percent.