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Issuer Credit Research

Issuer Flash: Philippine National Bank

Issuer: Philippine National Bank | Document: Issuer Flash | Date: 2026-10-27 | Event: 9m 2026 Results

Report date: 2026-10-27 Event date: 2026-10-23 Event title: 9M 2026 Results Research cutoff: 2026-10-26

1. Flash Conclusion

Philippine National Bank's nine-month results modestly strengthen the existing cautious senior-credit view of this private Philippine universal bank. Reported gross NPLs declined to 4.0% of loans from 5.2% a year earlier, while reported CET1 and total capital ratios were 19.3% and 20.0%. These primary-source risk indicators partly fill gaps left by the first-half disclosure and support a gradual improvement assessment.

Earnings quality remains conditional. Consolidated net income increased 14.9% to PHP21.27bn, but the broad impairment, credit and other-loss line moved to a PHP1.47bn net reversal from a PHP0.47bn charge. Expenses also rose faster than operating income. Deposits were almost unchanged from June and still below December, despite reported year-on-year growth. The result provides more evidence of resilience while leaving provisioning, deposit concentration and foreign-currency liquidity central to the bondholder assessment.

2. What Was Disclosed

PNB's October 23 press-release filing covers the nine months ended September 30. Its companion SEC Form 17-C contains unaudited consolidated financial information; PDS reposted both on October 26. The exchange category's reference to audited and other financial statements does not make these interim figures audited. The release supplies bank risk ratios without separately identifying their standalone or consolidated perimeter, so those ratios are kept distinct from the consolidated accounts below.

Consolidated net interest income rose 6.9% to PHP41.99bn and net service fees and commissions increased 14.4% to PHP4.58bn. The release reports gross loans of PHP793bn, up 13% year on year, led by corporate and commercial lending of PHP726bn. Gross loans and the consolidated loans-and-receivables line use different descriptions and are not reconciled here.

3. Credit Read-Through

Higher interest and fee income supports earnings capacity, but the net-income increase overstates the improvement that can be attributed to recurring operations alone. The loss-line swing is PHP1.94bn before tax, while operating expenses increased 10.0% against 8.8% operating-income growth. Other income outside trading and foreign exchange also rose materially, without a detailed decomposition in this package. The broad reversal includes impairment, credit and other losses; it is not a disclosed loan credit-cost ratio. Bondholders should test how much profit persists when reversals normalise and costs continue to grow.

The lower reported NPL ratio is constructive and answers an important monitoring question in the earlier reports. PNB attributes improvement to collections, recoveries, account resolution and stronger new lending quality. The release does not provide the NPL stock, provision coverage or migration data needed to quantify those effects or separate them from denominator growth. Reported capital ratios support loss absorption, but the package does not give a regulatory-capital amount, RWA bridge or ratio-perimeter reconciliation. The evidence supports continued caution about future charges as the loan book expands.

Funding comparisons require care. Consolidated deposits of PHP1.031tn were 2.9% below December and almost flat against June's PHP1.032tn. The release's 9% growth uses a year-earlier comparison and therefore does not reverse the year-end comparison. The reported 78% CASA share is supportive of the funding mix, while the 4.6% NIM supports earnings capacity; neither establishes deposit stickiness or foreign-currency liquidity. Consolidated loans and receivables increased 5.3% from December to PHP778.9bn. That combination warrants monitoring of funding mix and pricing even without evidence of current funding stress.

Management describes an opportunity to realise value from PNB Holdings Corporation and strengthen capital. No proceeds, timing or regulatory-capital reconciliation are quantified in the release; no incremental benefit from that opportunity is included in this credit assessment. The senior-credit conclusion also provides no basis to assume government or related-group guarantees, or identical protection for subordinated and regulatory-capital instruments.

4. Key Numbers

Metric Latest Comparison Credit reading
Consolidated net interest income, PHP bn 41.99 39.30 +6.9% calculated; supports operating earnings.
Consolidated net income, PHP bn 21.27 18.51 +14.9% calculated, partly supported by loss reversals.
Consolidated broad loss provision/(reversal), PHP bn (1.47) 0.47 A reversal versus an expense; recurrence is unconfirmed.
Consolidated deposits, PHP tn 1.031 1.061 Below December; almost flat versus June's 1.032.
Consolidated total equity, PHP bn 251.6 240.3 Accounting equity grew; distinct from regulatory capital.
Reported gross NPL ratio 4.0% 5.2% Lower year on year; NPL stock and coverage remain unconfirmed.
Reported CASA / NIM 78% / 4.6% Not supplied Supportive funding and margin indicators, not liquidity ratios.
Reported CET1 / total capital ratio 19.3% / 20.0% Not supplied Supports loss absorption; perimeter and RWA bridge remain to be checked.

Sources: October 23 key financial information, PDF pp.6–7; press release, PDF p.1; July 24 key financial information, PDF p.6 for June deposits. Income compares 9M2026 with 9M2025; consolidated balance-sheet items compare September 30 with December 31, 2025. The NPL comparison is September year on year. Release ratios have the perimeter limitation described above. Parentheses denote a reversal. Values are rounded; growth calculations use disclosed unrounded figures.

5. What To Watch Next

The next detailed financial and Pillar 3 disclosures should reconcile NPL stocks, coverage, sector and related-party concentrations, and the composition of reversals. Deposit currency, concentration, funding cost, LCR/NSFR and foreign-currency maturity coverage remain necessary to assess liquidity. A regulatory-capital bridge should show earnings retention, RWA growth, distributions and any realised PHC effects. Renewed NPL pressure together with weaker low-cost funding or lower capital would challenge the modest improvement view. Current bond documentation, instrument ratings and market levels are still needed for a security-specific or relative-value decision; this release supplies none of those updates.

6. Sources