Philippine National Bank improves profitability on cost management

It has a very high liquidity coverage ratio of 255% as of end-2024.

Philippine National Bank has sustained improvement of its core profitability, robust capital, and solid liquidity, according to Moody’s Ratings.

Its profitability— measured by return on assets— has improved significantly to 1.7% in 2024, from the 0.9% 5-year average over 2019-2023.

The bank has also widened its net interest margin (NIM) through its “superior management of funding costs as well as higher interest income amidst loan upgrades and recoveries,” said Moody’s.

The ratings agency expects PNB’s profitability to range around 1.7%-1.8% in 2025.

NIM expansion will reportedly be underpinned by the bank's large proportion of loans with higher rates fixed for 3-5 years, growth of higher yielding retail, small and medium enterprise-sized, and commercial loans, as well as its low funding costs.

“We expect credit costs to increase modestly, but remain low, supporting the bank's profits,” it added.

PNB's strong liquidity and funding are reportedly reflected by its very high liquidity coverage ratio of 255% in 2024, as well as strong franchise value in remittances.

“Despite PNB's modest deposit franchise with a 5% market share, its current and savings account (CASA) ratio was the highest among domestic rated-banks at 84% of total deposits and its funding cost was the lowest in 2024,” Moody’s said.