Philippine National Bank (PSE: PNB) posted net income of P11.4 billion for the first nine
months of 2022, registering an increase by P289 million from the first half net results,
buoyed by stronger net interest margins for the third quarter of the year.

The Bank’s nine-month net interest income increased by 4 percent year-on-year, driven
by a 21 percent growth in interest income earned from its investment portfolio and other
liquid placements, in the midst of the current rising interest rate environment, resulting in
an improved net interest margin of 3.4 percent from 3.3 percent a year ago.
Earlier this year, the Bank reported a P3.6 billion gain earned from the sale of an
investment property during the second quarter, which further boosted the year-to-date
net operating results of the Bank.

The nine-month net income is lower compared to the P26.4 billion reported for the same
period last year, largely due to the one-off P33.6 billion gain from the property-for-shares
swap transaction implemented in 2021. Without the effect of this one-off transaction, the
operating income of the Bank showed growth of 14 percent year-on-year.

The Bank’s gross loan portfolio expanded to P638.3 billion as of end-September 2022,
slightly up by 1 percent from the loan level last year as the Bank further stretched its
lending to large corporates during the period. Provisions set up on these loans are 97
percent lower than the amounts provided in the same period last year when the Bank was
still continuing to build its loan loss reserves, particularly on accounts impacted by the
pandemic.

Likewise, the Bank continued to build up its current and savings deposits, resulting in a
modest 1 percent increase in total deposits from year-ago level, tempered by the Bank’s
initiatives to further trim down high-cost time deposits, amid the rise in benchmark interest
rates.

On the other hand, net fee-based income for the first three quarters contracted by 8
percent year-on-year, primarily due to reductions in credit-related and underwriting fees.

The Bank took advantage of the strong capital markets in 2021, closing good-sized deals
which translated to higher underwriting fees. Treasury-related income declined year-onyear owing to muted trading opportunities amid the global monetary tightening and hike
in benchmark interest rates.

Operating expenses increased by 12 percent year-on-year on account of the taxes related
to the property sale, as well as higher amortization costs for the leased properties of the
Bank where it is currently holding its operations. These properties were the subject of
the properties-for-shares swap executed in 2021.

The Bank ended the third quarter of the year with total consolidated assets of P1.15
trillion, a percent higher than the year-ago balance on the back of growth in loans and
treasury assets. Similarly, the Bank’s reported income for the period elevated its total
equity by 10 percent year-on-year, bringing the Bank’s Capital Adequacy Ratio to 14.5
percent and Common Equity Tier 1 Ratio to 13.8 percent.

“PNB continues to be profitable as it showed improvements in efficiency pushing our
momentum towards achieving our strategic priorities,” said PNB Acting President Florido
Casuela. “Our results indicate that we have the right strategy to deliver real value to our
clients, our investors, and the overall economy in these challenging times,” he added.

In August 2022, PNB’s Digital App won an Excellence Award at the 19th Philippine Quill
Awards. “The New PNB Digital App Launch Campaign” was focused on maximizing
awareness on the Bank’s digital thrust while creating demand for the new application. In
September 2022, the Bank was named by the Social Security System as the 2022 Balikat
Ng Bayan awardee for “Best Disbursement Partner” in the Commercial Bank category.

The Bank’s life insurance arm, Allianz-PNB Life Insurance, Inc., was likewise recognized
by the Insurance Asia Awards as the “Marketing Initiative of the Year” for its Project
Sustainable Future.