PHILIPPINE NATIONAL Bank (PNB) has set its eyes on acquiring another financial institution and searching for a strategic partner in a bid to boost its consumer finance business.
In a press conference yesterday, PNB President and Chief Executive Officer Jose Arnulfo A. Veloso said the Lucio C. Tan-led lender is looking at acquiring a bank to “bring PNB to the next level.”
“If you take a look at competitors, it’s not just organic growth that will allow you to move and compete in the top league. So our objective is to be able to find financial institutions that PNB will be able to acquire,” Mr. Veloso told reporters following the bank’s annual stockholders’ meeting in Manila City on Tuesday.
He said the lender plans to acquire another financial firm to complement the bank’s strategy of expanding its consumer finance business.
“Two-thirds of our network is in the provinces. We would like to be able to have a good consumer finance business — it is currently lower than industry. We want to be at the top end of industry. If we can find a bank to acquire, we want a financial institution that will complement the business opportunity we’d like to develop,” the bank president said.
Chester Y. Luy, PNB executive vice-president, said 55% of the bank’s loan book is comprised of corporate loans, while consumer and commercial lending were at 35% and 11% of its total lending portfolio, respectively.
“We cannot do this overnight. We will continue to enhance our large corporate loans booking as well as commercial, and over the next two to three years, this when will see consumer finance taking a more active role,” Mr. Luy said.
“We have our eyes on the ball, and consumer finance is a good strategy for us.”
Previously, the bank said it wants its consumer loans to increase to 38% of its loan book to diversify risk and increase margins.
Apart from looking to acquire another bank, Mr. Veloso added that PNB’s owners are “open” to having a strategic partner which will hold a minority or 20-25% share.
“There are discussions happening for investors, there are also prospects for us to be able to acquire banks — but not yet the kind of discussion to allow us to be able to say we are in serious talks,” he said.
He also noted that the bank is more focused on acquiring a bank than looking for a partner.
For this year, PNB will allot P4 billion for capital expenditures, half of which or about P2 billion will be used for IT expenses.
In a regulatory filing yesterday, PNB reported that it booked higher net earnings in the first quarter of the year, with total assets breaching the P1-trillion mark.
The lender booked a P1.9-billion net income in the first three months of the year, up 30% from P1.5 billion posted in the same quarter in 2018.
PNB’s strong bottom line in the quarter was attributed to robust expansion in its total operating income, as net interest earnings and trading and foreign exchange gains improved.
Net interest income increased 10.9% to P7.1 billion in the January-March period from P6.4 billion in the same period last year.
Total loans reached P588.9 billion as of end-March, up 17% year-on-year, while trading and investment securities grew 62% to P188.4 billion.
Meanwhile, PNB’s deposit base grew 13% to P744.8 billion.
Trading and foreign exchange gains also climbed to P856 million in the first quarter from just P45 million a year ago.
Net services and commission income stood at P967 million, up 14% year-on-year, due to improvements in credit card and deposit-related fees.
Excluding provisions for impairment and credit losses, operating expenses grew 13% from a year ago, as robust revenue growth translated to higher business taxes and other business-related expenses.
Overall, PNB’s assets reached P1.03 trillion at the end of March, up 21% from P854 billion the previous year.
PNB shares closed at P52.50 apiece on Tuesday, up 10 centavos or 0.19% from the previous close. — Karl Angelo N. Vidal