PNB plans bad-debt clean-up

PHIIPPINE National Bank (PNB), a lender controlled by richest Filipino Lucio Tan, said it would sell P5.2 billion ($99 million) of bonds by July.
       The Manila-based bank will “no longer” sell dollar bonds, PNB president Omar Mier said after Tuesday’s annual stockholders’ meeting.
       Philippine banks are raising capital to comply with accounting rules imposed by the Bangko Sentral ng Pilipinas in 2005 in order to meet international standards. The rules are intended to boost banks’ financial strength, making them less vulnerable to shocks such as the 1997-1998 Asian financial crisis.
       PNB also plans to sell P15 billion of nonperforming loans and P1.5 billion of properties seized from defaulting borrowers this year, Mier said. The bank’s non-performing loans stood at P28 billion in the first quarter, down from P37.4 billion a year ago.
       Selling nonperforming assets will allow PNB to “focus on our core business such as remittances, lending to corporates and treasury operations,” Mier said.
       Lending, PNB’s next main income driver, has suffered on account of its high incidence of soured or nonperforming loans.
       PNB said its first-quarter profit rose 26 percent to P190 million, from P151-million posted in the year-ago period.
       It forecast profit this year to reach P760 million. The bank posted a 75-percent growth in profit to P627.5 million in 2005, and Mier had earlier predicted net income would grow by at least 15 percent this year.
       Over a five-year period, the bank aims to generate P4 billion to P5 billion in net income, Mier said, adding that banks with P30 billion in capital typically generate P4.8 billion in profits, something PNB cannot do on account of its high non-performing assets.
       Now back in private hands, PNB vows to regain its premier standing as the country’s number one bank.
       Mier acknowledged PNB no longer holds the top spot in the highly competitive remittance market, its share having been cut to just 22 percent instead of the commanding 30-percent share in the recent past.
       “We have to get it back from our competitors, of course.” Mier said.
       Tan also owns privately held Allied Banking Corp., Fortune Tobacco Corp. and Asia Brewery Inc. He may merge PNB with his privately held Allied Bank. Bloomberg, Jun Vallecera