P NB SEES DECLINE IN LOAN LOSS PROVISIONING EXPENSE

Tycoon Lucio Tan-led Philippine National Bank (PNB) has seen signs of improvement in the credit environment in the third quarter, resulting in a decline in loan loss provisioning expense compared to first two quarters when economic constraints from the COVID-19 pandemic were at their peak.

If the improvement in macroeconomic trend would continue in the fourth quarter, PNB president and chief executive officer Wick Veloso—who was recently named “Best CEO” by The Asian Banker magazine during its annual Leadership Achievement Awards—expects PNB to post a full-year profit level that’s “reasonable” given the pandemic.

From January to August this year, Pnb—cited by Asian Banker as the “Best Managed Bank” in the Philippines—has set aside about P9 billion in provisioning for probable loan losses. Of this. P8.4 billion was set aside in the first two quarters. The provisions hit as high as P5.1 billion in the second quarter alone.

For the third quarter, PNB chief financial officer Nelson Reyes said provisioning level would be lower than the P5.1 billion in the second quarter.

“Third quarter has already demonstrated an improvement in terms of economic forecast and therefore the provisioning is decreasing,” Veloso said.

Veloso said it was now just a question of whether PNB would keep some of the loan loss reserves as part of provisioning expense for the remainder of the year, or claw back some and effectively recognize higher profits.

But while the provisioning requirements are declining alongside the reduction in expected credit losses amid improving economic forecasts, Reyes warned that these might be offset by actual loan delinquencies.

In recent months, the government has allowed the domestic economy to reopen, thereby improving the cash flow of businesses that were hit hard during the COVID-19 pandemic-prompted lockdown protocols that started in mid-march.

Meanwhile, the award from The Asian Banker was given to PNB for demonstrating excellence on its response to the challenges brought about by the enhanced community quarantine (ECQ) imposed due to the COVID-19 outbreak.

“The pandemic has proven to be the toughest challenge we are facing as a business community and as a Filipino nation thus far. We are delighted that our efforts in providing safe and sustainable banking have been recognized by The Asian Banker. It is truly an honor,” Veloso said.

The Asian Banker’s Leadership Achievement Awards Program is widely acknowledged as the highest possible recognition given to professionals in the financial services industry in Asia-pacific, Middle East and Africa. The program aims to provide benchmarks of exemplary leadership for future generations of potential leaders so that the industry can develop in a sustainable manner.

With the appropriate technologies already in place prior to the lockdown in March, PNB was able to quickly deploy majority of its workforce on a work-from-home arrangement to ensure uninterrupted financial services while safeguarding the health of its customers and employees. In addition to its digital platform, financial services were also made accessible to customers as its “Bank On Wheels” made rounds in areas where automated teller machines were limited. The bank also launched numerous initiatives to assist individuals severely affected by the ECQ such as Pnbigay Tulong, an employee-giving campaign benefiting outsourced personnel who were temporarily not allowed to go to work because of the lockdown.