Philippine National Bank Issuer Summary

Report date: 2026-05-14
Issuer: Philippine National Bank
Sector: Philippine banking
Primary credit focus: Issuer credit, senior bank bonds, issuer risk for foreign-currency and domestic bonds; subordinated and regulatory capital instruments subject to review of terms

1. Business Snapshot and Recent Developments

Philippine National Bank is a privately owned listed universal bank headquartered in the Philippines. It is a banking group combining deposits, corporate and commercial lending, retail lending, trade finance, foreign exchange, trust and wealth management, securities and investment banking, insurance-related services, and overseas remittances. From a credit perspective, it is most naturally viewed as an upper-mid-tier private bank with a domestic deposit base. Historically, it is an old bank established in 1916, and company materials refer to its becoming the first universal bank in the Philippines and its historical role as a de facto central bank until 1946. However, the first error to avoid in current bond analysis is treating PNB as a government-guaranteed or quasi-sovereign issuer merely because of this history. PNB should currently be assessed as a private bank associated with Lucio Tan / LT Group, based on the bank’s own deposits, asset quality, capital, liquidity, and market access. The exact ownership percentage and control chain of LT Group have not been verified in this report, so this relationship is treated as a related-party and governance issue rather than as a source of support expectation.

The central question in PNB’s current credit analysis is the extent to which earnings recovery, loan growth, deposit base, and capital headroom from 2025 through the first quarter of 2026 offset the constraints of being a somewhat smaller private bank than the top-tier institutions. Full-year 2025 consolidated net income was PHP 25.3bn according to PSE EDGE, described in company-disclosure-based media reports as a 20% year-on-year increase, and earnings were also up by about 5% in Q1 2026. At the same time, PNB is not as large as the top-tier banks such as BDO, BPI, or Metrobank, and its end-2025 NPL ratio of 4.7% was above the Philippine banking system average of 3.1%. This report therefore positions PNB as an improving private bank whose credit profile is supported by deposits and capital, with particular focus on the sustainability of improvement, the quality of loan growth, and unverified aspects of foreign-currency and bond structures.

The latest key figures and credit interpretation are as follows.

PNB’s company profile is that of a bank with a strong deposit base and broad overseas Filipino and international reach, while asset quality remains a constraint. According to company materials, as of June 2025, the bank had 631 domestic branches, 1,719 ATMs, and 70 overseas branches, representative offices, remittance centers, and subsidiaries across Asia, Europe, the Middle East, and North America. This indicates that PNB is not merely a local bank, but a bank with touchpoints across domestic corporates and individuals, SMEs, overseas Filipinos, and international corporates. However, this broad network does not necessarily mean high profitability or low risk. Overseas remittances, foreign-currency liquidity, foreign-currency bonds, overseas offices, and related-party transactions add issues that need to be checked beyond those of a conventional domestic deposit-and-lending bank.

In terms of recent credit developments, 2025 was a year of earnings improvement and asset-quality improvement, while Q1 2026 confirmed continued improvement but was also a quarter in which growth moderation and balance-sheet fluctuation should be monitored. There is no need to overstate a single quarter, but in assessing PNB, the key is whether the balance among loan growth, deposits, capital, and asset quality remains intact.

2. Industry Position and Franchise Strength

In the Philippine banking market, the deposit base, corporate relationships, payments, remittances, consumer finance, and capital-market access of major domestic banks are important drivers of credit quality. BSP supervision, the depth of domestic deposits, and Philippine economic growth are supportive, but for banks with retail loans, SME exposure, commercial real estate exposure, related-party exposure, foreign-currency funding, and overseas operations, credit quality is determined not only by earnings growth but also by asset quality and liquidity. PNB should be viewed not as a bank with the overwhelming franchise of the top-tier institutions, but as an upper-mid-tier private bank competing on history, domestic branches, overseas Filipino access, corporate and commercial lending, and adequate capital.

PNB’s first franchise strength is its domestic deposit base. End-2025 deposits were reportedly PHP 1.06tn, and Q1 2026 deposits were reported at PHP 1.01tn, giving the bank a deposit base above PHP 1tn. For a bank issuer, deposits are the most important funding source, and a bank with a deep base of low-cost current and savings accounts can support lending without excessive reliance on market funding. The CASA ratio was reported at about 80% in Q1 2026, while Moody's-related reporting indicated a 2025 CASA ratio of 75%; this depth of low-cost funding is a clear strength for PNB.

However, liquidity should not be assessed from deposit size and CASA ratio alone. To judge how sticky PNB’s deposit base is, one needs the split between retail and corporate deposits, large-depositor concentration, foreign-currency deposits, currency-by-currency maturity profile, deposit beta, and loan-to-deposit ratio. These have not been fully verified as of this report. PNB’s deposits are therefore a core credit support, but there is not enough information to draw firm conclusions about their stress behavior.

The second strength is the breadth of domestic and overseas customer touchpoints. Company materials state that PNB serves individual depositors, SMEs, domestic corporates, international corporates, and overseas Filipinos, and has 631 domestic branches, 1,719 ATMs, and 70 overseas branches, representative offices, remittance centers, and subsidiaries. This is a differentiating factor that combines overseas remittances and international offices, rather than being a purely domestic commercial banking model. Overseas Filipino remittances are important both for the Philippine economy and for bank customer access, supporting PNB’s brand and network.

At the same time, overseas offices and international remittances increase credit monitoring items. Foreign-currency funding, foreign-currency bonds, remittance regulation, AML / sanctions compliance, local overseas regulation, cyber risk, and operational risk make the bank more complex than a bank focused only on domestic deposits and loans. When bond investors assess PNB, the overseas network should be viewed not only as a franchise strength but also alongside compliance and foreign-currency liquidity risks.

PNB’s franchise constraints are its scale and transparency relative to the top-tier banks. The overall domestic banking system was reported to have assets of about PHP 29.9tn, deposits of PHP 21.9tn, and loans of PHP 17.1tn at end-2025. PNB’s total assets were PHP 1.375tn, which is large enough to matter, but not dominant within the system in the way the leading banks are. If its NPL ratio is higher than that of the leading banks, asset quality, provisioning, recovery capability, and risk selection matter more than scale alone in determining the credit assessment.

In one sentence, PNB’s franchise assessment is that it is a private bank with a broad domestic and overseas network and deposits above PHP 1tn, but one that should be discounted for asset quality and its scale gap versus the top-tier banks. Market access and ratings reporting are supportive, but government guarantee, parent or related-group support, and historical role should not be used as substitutes for credit analysis.

3. Segment Assessment

PNB’s business is most naturally viewed through Retail Banking, Corporate Banking, Treasury, and other businesses as disclosed. Its company profile describes the provision of deposits, loans, bills discounting, trade finance, foreign exchange, mobile banking, investment banking, treasury operations, funds transfer, remittances, and trust services. In credit analysis, this business list should not be treated as a product catalogue, but as a basis for assessing which units generate stable earnings and which units increase credit risk, market risk, and capital consumption.

At this stage, detailed 2025 segment profit, segment RWA, and segment NPL data for PNB on a standalone basis have not been verified. The table below is therefore a credit interpretation based on disclosed business descriptions and company comments for 2025 and Q1 2026, not a precise segment income statement.

Retail Banking provides a funding base through retail deposits and CASA, as well as revenue opportunities from consumer loans, cards, mortgages, and auto loans. Company-disclosure-based reports indicate that consumer loans grew 27% year on year in 2025 and drove loan growth. However, consumer loans are sensitive to the economy, employment, interest rates, and household income, so a high growth rate supports earnings but can also seed future NPLs.

Corporate / Institutional Banking is PNB’s traditional source of earnings. Corporate and commercial loans were reportedly up 13% year on year in 2025, supporting growth through lending to corporate and commercial customers. At the same time, large-name concentration, real estate, related-group exposures, cyclical industries, and SME liquidity determine asset quality, so one should not conclude that loan growth is credit positive without checking the composition of the corporate book, collateral, and provisioning coverage.

Treasury supports bank liquidity management and supplements non-interest income. Multiple reports refer to trading and foreign-exchange income, alongside net interest income and fee income, as contributors to 2025 earnings improvement. From a bondholder perspective, it is important not to treat trading income as recurring earnings too readily. In periods of interest-rate movement, securities valuation, hedging, foreign-currency positions, and the price volatility of liquid assets can affect both accounting earnings and capital.

Trust / Wealth Management and bancassurance deepen PNB’s non-interest income. The CFO was reported as saying that fee-generating businesses such as deposits, loans, credit cards, trust, and bancassurance supported 2025 performance. In bank credit, higher non-interest income can support earnings when NIM declines. However, the degree to which wealth and trust operations at a Philippine bank can stably cover fixed costs needs to be tested through detailed disclosures.

Remittance / Overseas is a distinctive feature of PNB. Remittance services for overseas Filipinos and overseas offices support customer touchpoints that can lead to brand value, foreign exchange, deposits, cards, and investment products. At the same time, AML, sanctions, local overseas regulation, cyber, and operational risks can arise, and any issue may spill over not through credit costs but through reputation, counterparties, and foreign-currency funding.

The segment assessment is that PNB’s credit profile is supported by Branch / Retail deposits, Corporate lending and corporate relationships, Treasury liquidity management, and Remittance / Overseas customer access. However, the key constraints also lie in the same areas. Rapid growth in consumer loans and corporate lending, a high NPL ratio, foreign-currency and overseas operations, related parties, and individual bond terms require further verification.

4. Financial Profile and Analysis

PNB’s financial profile improved materially in 2025. However, improvements in net income, ROE, NIM, loan growth, deposits, and capital ratios need to be separated from the still-high NPL ratio and unverified aspects of loan growth quality, provision coverage, credit costs, sector risk, and currency-specific liquidity. The appropriate reading of PNB’s financial profile is therefore that improvement is visible, but asset-quality constraints remain.

Key financial data based on the PSE EDGE financial reports page are as follows. A complete comparable 2023 table had not been obtained as of this report, so the table focuses on 2024, 2025, and Q1 2026.

The table shows that earnings improvement in 2025 was clear. PSE summary net income increased from PHP 21.2bn in 2024 to PHP 25.3bn in 2025, while media reports showed ROE of 11.1%, NIM of 4.51%, loan growth of 15%, deposit growth of 9%, and a lower NPL ratio. In Q1 2026, however, net income increased year on year while gross revenue was nearly flat, suggesting that cost control and a better composition of net interest income and fees may have supported earnings. It is too early to assume from Q1 alone that the 20% earnings growth pace of 2025 will continue.

Asset quality is PNB’s largest issue. The NPL ratio was reported at 4.7% in 2025 and 4.78% in Q1 2026. The improvement from 5.7% in 2024 is clearly positive. Management attributed this to portfolio review, risk scoring, and early engagement with customers. However, the Philippine banking system’s overall NPL ratio was reported at 3.1% at end-2025, so PNB’s level remains high. The decline in NPLs should therefore be read not as a resolution of the issue, but as a heavy asset-quality burden that is improving.

For a bank issuer, provision coverage and credit costs are important alongside the NPL ratio. As of this report, PNB’s full-year 2025 provision coverage, Stage 2 / Stage 3 exposures, restructurings, collateral, sector-level NPLs, and large-name exposures have not been directly verified. This is an important constraint. Even with an NPL ratio of 4.7%, losses can be absorbed if collateral and provisioning are sufficient, but if provisions are thin and collateral disposal is difficult, the burden on capital can be larger. To assess PNB’s asset quality, the next update needs to review its Pillar 3 / Basel III disclosures and the full SEC Form 17-A.

Profitability improved in 2025. ROE of 11.1%, Q1 2026 ROE of 10.8%, and ROA of 1.91% are important for absorbing asset-quality pressure through earnings. In PNB’s case, the 2025 earnings level thickened the capital buffer and provided resources for loan growth.

However, the quality of earnings remains partly unverified. The 2025 earnings increase appears to have reflected a combination of loan growth, NIM, fee income, cost efficiency, and lower credit costs, but the contribution from trading gains, foreign-exchange gains, provision reversals, and one-off recoveries has not been fully decomposed. In bank earnings improvement, a decline in credit costs can sometimes be a major contributor. Whether lower credit costs reflect genuine asset-quality improvement or temporary reversals and recoveries is central to the direction of issuer credit.

Capital ratios are a clear strength. Searchable disclosure extracts related to LT Group’s 2025 SEC Form 17-A indicate that PNB’s end-2025 consolidated total capital ratio was 20.12%, its CET1 ratio was 19.31%, and RWA was PHP 941.65bn. For a Philippine bank, this level indicates substantial room to absorb loan growth and asset deterioration. Moody's was also reported to have cited PNB’s strong capital. Capital strength is the largest offset to the bank’s elevated NPL ratio.

Even so, capital ratios should not be over-relied upon at face value. In a phase of 15% loan growth, RWA can also grow readily, and if consumer loans, SMEs, commercial real estate, and foreign-currency lending expand, risk weights and credit costs may rise later. In assessing PNB’s capital, one should look not only at the ratio but also at CET1 capital amount, RWA, dividends, and loan growth together.

The conclusion on financial analysis is that PNB’s 2025 to Q1 2026 figures support the bank’s standalone credit resilience. However, the improvement in credit quality is still conditional. Earnings, deposits, and capital are strong. At the same time, the NPL ratio remains high, and the quality of loan growth, provision coverage, foreign-currency liquidity, and individual bond terms are unverified. This combination provides a basis for viewing PNB as an improved bank, but not for treating it as a low-risk bank comparable to the top-tier institutions.

5. Structural Considerations for Bondholders

For bondholders, PNB’s structural issues should be viewed in three parts. First, PNB is a bank issuer and should be assessed within the framework of depositors, regulators, PDIC, BSP supervision, and resolution regime. Second, as a private bank associated with Lucio Tan / LT Group, its relationship with the related group should be reviewed not as a support expectation, but as a matter of governance, related-party transactions, capital policy, and concentration risk. Third, for foreign-currency bonds, domestic bonds, subordinated bonds, and regulatory capital instruments, issuer, currency, ranking, redemption terms, non-viability, and regulatory loss-absorption language matter separately from issuer credit.

Historically, PNB was a bank with close links to the state, and company materials describe its public role since inception. However, this report has not verified any basis for treating current PNB bonds as government-guaranteed debt. BSP supervision, PDIC deposit insurance, and system-stability measures exist, but they are not explicit guarantees for unsecured senior bonds or subordinated bonds. PNB is also reported as a Lucio Tan-led bank and is a significant contributor to LT Group’s banking segment, but the exact ownership percentage and control chain of LT Group have not been verified in this report. Related-party transactions, credit to group companies, dividend policy, capital returns, intra-group funding movements, and large exposures remain unverified items.

For a bank issuer, the treatment of depositors and regulators and the ranking of senior unsecured bonds, subordinated bonds, AT1 / Tier 2, and other regulatory capital instruments are important. PNB has issued foreign-currency MTNs, sustainability bonds, and domestic bonds in the past, and was reported to have issued a PHP 15.7bn ASEAN Sustainability Bond in 2025. Market access is positive, but for individual bond investment, the terms, security, negative pledge, cross default, change of control, early redemption, tax provisions, regulatory redemption, non-viability, and governing law need to be checked.

This report focuses primarily on PNB’s senior issuer credit. Senior bonds are supported by PNB’s continuity as a bank, deposit base, capital ratios, and liquidity. Subordinated and regulatory capital instruments, however, are materially affected by loss-absorption ranking, coupon cancellation, redemption discretion, regulatory approval, and non-viability loss absorption, even for the same issuer. Even if Moody's Baa2/P-2 is reported, individual senior unsecured bonds, foreign-currency bonds, and subordinated or regulatory capital instruments should not be treated as the same risk without checking rating notching and contractual loss absorption.

For foreign-currency bonds, the relationship between peso-denominated bank earnings and deposits and foreign-currency liabilities is important. PNB has overseas offices and a remittance network, so it likely has some foreign-currency income and foreign-currency assets. However, foreign-currency liquidity, hedging, currency-specific assets and liabilities, foreign-currency bond maturities, and the stickiness of foreign-currency deposits have not been sufficiently verified in this report. Even if peso-denominated credit quality appears strong, foreign-currency liquidity is required to repay foreign-currency bonds. Therefore, foreign-currency bond investment requires checking USD liquidity and hedging in addition to issuer credit.

In summary, PNB’s issuer credit is supported by the bank’s own capital and deposits, but the ultimate risk for bondholders varies depending on issuer, ranking, currency, regulatory loss absorption, related parties, and the presence or absence of government guarantee. At this stage, senior credit can be discussed in the context of an investment-grade bank, but strong investment conclusions on individual bonds, subordinated bonds, or foreign-currency bonds should not be made without reviewing the offering circular.

6. Capital Structure, Liquidity and Funding

PNB’s funding and liquidity are supported by its deposit base and capital ratios. Deposits were reported at PHP 1.06tn at end-2025 and PHP 1.01tn in Q1 2026, remaining above PHP 1tn. The Q1 2026 CASA ratio was reported at about 80%, while Moody's-related reporting cited a 2025 CASA ratio of 75% and LCR of 260%. Deposit size, CASA, and the reported LCR make it difficult to identify major short-term liquidity weakness, but primary disclosures, NSFR, currency-specific maturities, and deposit concentration have not been verified.

The credit significance of the deposit base is that it can fund loan growth on a stable basis. Against 15% loan growth in 2025, deposits were also reported to have increased by 9%. If loans continue to grow much faster than deposits, the loan-to-deposit ratio would rise and dependence on market funding or higher-cost time deposits would increase. The exact loan-to-deposit ratio has not been verified, but deposits above PHP 1tn and a high CASA ratio suggest at least short-term capacity to support loan growth.

However, the reported decline in deposits from PHP 1.06tn at end-2025 to PHP 1.01tn in Q1 2026 should not be simply ignored. Bank deposits fluctuate due to seasonality and movement of large corporate funds, so this alone does not indicate deposit-outflow concern. However, if loans are growing 15% while deposits are flat or declining, the funding structure will gradually tighten. In the next review, the loan-to-deposit ratio, CASA balance, increase in time deposits, foreign-currency deposits, and interbank / market funding need to be analyzed separately.

Capital reinforces PNB’s liquidity assessment. Banks do not repay liquidity directly with capital, but a high capital ratio provides comfort to depositors, rating agencies, bond investors, and regulators, and can reduce funding costs. The end-2025 CET1 ratio of 19.31% and total capital ratio of 20.12% are high levels for a bank. Given loan growth and the elevated NPL ratio, this capital headroom is central to PNB’s credit quality.

The main capital and liquidity indicators to confirm are as follows.

The most important unverified issue in PNB’s funding structure is foreign currency. As a domestic bank, its main earnings and deposits are in pesos, but it has issued foreign-currency MTNs and sustainability bonds in the past. For foreign-currency bond investment, peso-denominated deposits, earnings, and capital are not enough. Foreign-currency assets, foreign-currency deposits, overseas-office liquidity, hedging, swaps, foreign-currency bond maturities, and currency mismatches matter. These have not been verified in this report, so individual investment decisions on foreign-currency bonds require additional confirmation.

The liquidity conclusion is that deposit size, CASA, and reported LCR make major weakness difficult to identify, but the details remain unverified. Deposit concentration, NSFR, foreign-currency liquidity, currency-specific maturity profile, and bond terms are unverified, so senior issuer credit analysis and liquidity / covenant risk on individual bonds should be treated separately.

7. Rating Agency View

Moody's is the central reference point for PNB’s ratings. According to media reports, Moody's upgraded PNB’s long-term foreign-currency and local-currency deposit ratings from Baa3 to Baa2 in April 2025, and maintained the Baa2/P-2 ratings with a Stable outlook in April 2026. The 2026 article referred to strong capital, profitability, funding profile, a high CASA ratio, and a high LCR. This report has not directly verified the original Moody's reports, so the detailed rationale, ratings on individual senior unsecured bonds, foreign-currency bonds, and subordinated or regulatory capital instruments, and any rating notching are treated as unverified.

When using the rating agency view in credit analysis, the rating should not substitute for analysis; the NPL ratio, provisioning, loan growth, foreign-currency liquidity, and related-party risk should be checked separately. The media reports reviewed for this report are mainly in the context of deposit ratings and bank ratings, and risks on individual senior bonds or subordinated bonds may be notched separately. The Philippine sovereign rating, banking system assessment, BSP supervision, and PDIC framework are relevant background factors, but they do not imply a government guarantee for individual bonds.

The areas where Moody's view and this report’s view align are PNB’s capital, deposits, and liquidity profile as strengths. The reported combination of a 19.31% CET1 ratio, 20.12% total capital ratio, 75-80% CASA ratio, and 260% LCR supports PNB’s bank credit profile. However, the primary LCR disclosure, currency-specific liquidity, and ratings on individual bonds are unverified. The 2025 profitability metrics of ROE 11.1% and ROA around 1.9% also indicate capital formation and capacity to absorb credit costs.

The area where this report takes a more cautious view is the combination of the NPL ratio and loan growth. Even if Moody's maintained a stable outlook, an NPL ratio of 4.7-4.78% is higher than the Philippine banking system average of 3.1%, and asset quality constrains PNB’s upside. In a phase of 15% loan growth, if asset-quality improvement lags, future credit costs may rise again. Therefore, a Stable rating supports current resilience, but does not guarantee that improvement will continue automatically.

Downgrade-direction triggers to monitor include a renewed increase in the NPL ratio, higher credit costs, lower provision coverage, deposit outflows or a decline in the CASA ratio, lower CET1 / CAR, deterioration in foreign-currency liquidity, a worsening Philippine sovereign or banking system outlook, and significant related-party or compliance incidents. Upgrade-direction factors would require a sustained decline in the NPL ratio and credit costs, confirmation of loan growth quality, stable ROE, maintenance of capital ratios, maintenance of low-cost deposits, and improved profitability relative to the leading banks.

8. Credit Positioning

PNB’s credit positioning within the Philippine banking sector can be summarized as an upper-mid-tier private bank that is not among the top-tier institutions but has external investment-grade assessment and adequate capital and deposits. Compared with top-tier banks such as BDO, BPI, and Metrobank, it is likely weaker in total assets, franchise, depth of non-interest income, and market recognition. On the other hand, compared with smaller banks or rapidly growing, retail-heavy banks, its history, branch network, overseas network, deposit scale, capital ratio, and Moody's Baa2 reporting are supportive.

A comparison with the overall Philippine banking system clarifies PNB’s strengths and weaknesses. The overall system was reported to have an end-2025 NPL ratio of 3.1%, loans of PHP 17.1tn, and deposits of PHP 21.9tn. PNB’s deposits of PHP 1.06tn are equivalent to just under 5% of system deposits. Total assets of PHP 1.375tn are equivalent to about 4.6% of the system total. This indicates sufficient domestic presence, but not an overwhelmingly large systemic bank.

Among similarly rated banks on a media-reporting basis, PNB is a bank with strong capital and deposits but a discount for asset quality. Moody's assignment of Baa2 and maintenance of Stable indicate an investment-grade foundation. However, the elevated NPL ratio, rapid loan growth, and unverified provision coverage and sector risks are reasons to require a higher credit risk premium than for leading banks, even within the same reported Baa2 category.

From a bond investor perspective, senior and subordinated instruments need to be separated. For senior bank bonds, PNB’s deposits, capital, liquidity, and market access support issuer credit. For subordinated bonds and regulatory capital instruments, the NPL ratio, credit costs, CET1 ratio decline, non-viability provisions, and coupon cancellation / redemption discretion become more important. Even if the market treats PNB as a reported Baa2 bank, instruments should not be compared at the same spread level without checking each product’s loss-absorption ranking and individual rating.

Live spreads, bond prices, OAS, and CDS have not been verified in this report. Therefore, no conclusion is made on cheapness, richness, buy, sell, or hold. Fundamentally, it is natural to place PNB below the top-tier Philippine banks because of asset quality and scale differences, but above smaller banks because of deposits, capital, and rating support. To assess relative value, same-maturity senior and subordinated bonds from BDO, BPI, Metrobank, Security Bank, RCBC, UnionBank, and others need to be compared on spread, rating, capital, NPL, and LCR.

The constructive case for PNB rests on its 20% earnings growth in 2025, ROE of 11.1%, NIM of 4.51%, deposits above PHP 1tn, improved NPL ratio, CET1 ratio of 19.31%, total capital ratio of 20.12%, and Moody's Baa2/Stable reporting. The cautious case rests on its NPL ratio being above the system average, unverified quality of loan growth, unverified provision coverage and sector risk, unverified foreign-currency and individual bond terms, and smaller scale than the top-tier banks.

9. Key Credit Strengths and Constraints

PNB’s credit profile is supported by deposits, capital, and improving earnings, while constrained by asset quality, loan growth, its scale gap versus the leading banks, and unverified foreign-currency, bond-term, and related-party issues. This combination supports treatment as an investment-grade bank for senior issuer credit, but not as a credit with the same low-risk profile as the top-tier banks.

The key credit strengths are as follows.

The main constraints are as follows.

The largest constraint is the NPL ratio. The 4.7% level remains high even after improvement, and problem loans can emerge with a lag after loan growth. It is necessary to verify whether growth in consumer loans and corporate / commercial loans reflects acquisition of good-quality customers or increased risk-taking to capture yield.

The next constraint is the list of unverified items. Public summaries and media reports give a broad direction, but provision coverage, credit costs, sector-level loans, large exposures, related parties, foreign-currency liquidity, and individual bond terms are gaps that need to be filled before individual bond investment.

Taken together, the strengths and constraints indicate that PNB is a bank in which capital and deposits support an elevated NPL ratio and loan-growth risk. It has external investment-grade assessment, but given the NPL ratio and unverified terms, it should not be treated as a low-risk credit comparable to the top-tier banks.

10. Downside Scenarios and Monitoring Triggers

The most realistic downside for PNB is not immediate deposit outflow or funding stress, but a scenario in which asset quality deteriorates again after loan growth, and credit costs erode earnings and capital. The improvement in the NPL ratio in 2025 is positive, but the Q1 2026 level remained high at 4.78%. With loans growing 15%, deterioration in consumer loans, SMEs, commercial real estate, or corporate concentrations could drive the NPL ratio higher again.

The first downside is a renewed increase in NPLs. If 27% growth in consumer loans and 13% growth in corporate and commercial loans are not supported by sufficient credit selection and collateral, delinquencies could increase as a result of economic slowdown, interest burden, weaker employment, or weaker corporate earnings. If the NPL ratio returns to the 5% range and provision coverage is insufficient, credit costs would rise again and the 2025 earnings recovery would become less sustainable.

The second downside is NIM compression and higher deposit costs. PNB’s 2025 NIM of 4.51% is strong, but if the rate environment changes, deposit rates rise, and loan yields decline, net interest income would be pressured. A high CASA ratio is supportive, but if CASA shifts into time deposits or rates are raised to prevent outflows of large corporate deposits, funding costs will increase. When NIM compression and higher credit costs occur at the same time, ROE can decline quickly.

The third downside is foreign-currency liquidity and bond maturities. PNB has domestic deposits, but when foreign-currency bonds and overseas operations are involved, separate foreign-currency liquidity is required. If the dollar market closes, peso depreciation and higher swap costs occur, or foreign-currency deposits flow out, even a bank that appears strong in peso terms may face greater refinancing pressure on foreign-currency bonds. Because individual foreign-currency bond maturities, hedging, and MTN terms are unverified, this risk remains a pending item.

The fourth downside is LT Group-related, related-party, and governance risk. Association with Lucio Tan / LT Group can be positive for brand and business relationships, but bank creditors need to verify related-party exposures, intra-group dividends, capital policy, and transparency on large transactions. If stress in a related group spills over into the bank’s lending, reputation, or funding, PNB’s strong standalone capital ratio may not fully protect investor sentiment.

The fifth downside is deterioration in the rating outlook. Moody's Baa2/Stable reporting supports market recognition, but ratings on individual bonds are unverified. If a renewed increase in NPLs, lower ROE, lower CET1 ratio, deposit outflows, weaker foreign-currency liquidity, and a worsening Philippine sovereign or banking system outlook occur together, the rating outlook could weaken. Even before an actual downgrade, bond spreads could react first.

The main monitoring items are as follows.

The improvement scenario is one in which the NPL ratio declines to the low-4% range or below, provision coverage is sufficient, loan growth remains within the capacity of deposits and capital, and ROE and the CET1 ratio remain high. Conversely, if loan growth, a renewed increase in NPLs, lower CASA, NIM compression, and lower capital ratios occur together, the 2025 recovery would look like a temporary improvement, and even senior bonds would require a higher risk premium.

11. Credit View and Monitoring Focus

The current credit assessment is that PNB can be treated as an investment-grade bank for senior issuer credit, but not placed in the same low-risk category as the top Philippine banks. PNB is supported by deposits above PHP 1tn, a reported CASA ratio of around 75-80%, an end-2025 CET1 ratio of 19.31%, total capital ratio of 20.12%, and 2025 net income of PHP 25.3bn, giving it standalone credit resilience as a bank. However, ratings and terms for individual senior unsecured bonds, foreign-currency bonds, and subordinated or regulatory capital instruments are unverified. The credit direction is mildly improving to stable, but the Q1 2026 earnings growth rate was only about 5% and the NPL ratio remained high at 4.78%, so this should not be viewed as a rapid improvement phase. The view should be revisited if loan growth quality, renewed NPL increase, deposit / CASA decline, and foreign-currency liquidity all deteriorate at the same time.

This credit profile is supported by the domestic deposit base, low-cost deposits, capital ratios, improved profitability, and broad access to overseas Filipino and corporate customers. PNB is not as large as the top-tier banks, but it is not a small bank either. With 631 domestic branches, 1,719 ATMs, and 70 overseas offices and related locations, its franchise connecting individuals, SMEs, corporates, and overseas Filipinos supports deposits and fee income. Moody's Baa2/Stable reporting is also an external assessment indicating that the market treats PNB as an investment-grade bank, but it does not substitute for checking ratings on individual bonds.

The main constraint is asset quality. The 2025 NPL ratio improved from 5.7% to 4.7%, but remained above the system average of 3.1%. It was also 4.78% in Q1 2026, so improvement has not accelerated. Given 15% loan growth, future NPLs and credit costs are the central indicators for PNB’s credit view. Whether growth in consumer loans and corporate / commercial lending reflects acquisition of good-quality customers or increased risk-taking for yield has not been fully verified at this stage.

By security class, senior bank bonds must be separated from subordinated and regulatory capital instruments. Senior bonds are supported by the issuer’s overall deposits, liquidity, capital, and earnings. Subordinated bonds and regulatory capital instruments are more heavily affected by non-viability, redemption discretion, coupon cancellation, regulatory approval, and loss-absorption ranking. Because the offering circulars for individual bonds have not been reviewed, the issuer credit assessment in this report should not be applied directly to subordinated or regulatory capital instruments.

The monitoring focus going forward is, first, whether the NPL ratio, credit costs, and provision coverage maintain the 2025 direction of improvement; second, whether loan growth is balanced with deposits, CASA, and capital; third, whether the CET1 ratio and total capital ratio remain high after loan growth; and fourth, whether foreign-currency liquidity and individual bond terms can be confirmed. In particular, because deposits may have declined in Q1 2026 from end-2025, the loan-to-deposit ratio and funding-cost trend should be monitored carefully.

Conditions for improving the credit view include a decline in the NPL ratio to the low-4% range or below, stable provision coverage and credit costs, ROE around 10%, a high CET1 ratio, and confirmation of liquidity strength through primary disclosures on CASA, LCR, and currency-specific liquidity. Conversely, if the NPL ratio returns to the 5% range, credit costs rise after loan growth, CASA declines, refinancing pressure on foreign-currency bonds increases, and the rating outlook worsens, a larger discount would be needed to the current investment-grade bank assessment.

The current conclusion is that PNB should be positioned as a deposit- and capital-led Philippine private bank that is improving but still requires monitoring of asset quality. Its senior credit has a degree of resilience. However, until the NPL ratio, quality of loan growth, foreign-currency liquidity, individual bond terms, and related-party issues are verified, it should not be treated as a low-risk credit comparable to the top-tier banks.

12. Short Summary & Conclusion

Philippine National Bank is a Philippine private universal bank with domestic deposits above PHP 1tn, a broad branch and overseas remittance network, and thick regulatory capital. Its 2025 earnings growth, improved NPL ratio, 19.31% CET1 ratio, and Moody's Baa2/Stable reporting support its standalone bank credit assessment, but its NPL ratio remains above the system average, and the quality of loan growth as well as foreign-currency and individual bond terms are unverified. Senior credit can be viewed in the context of an investment-grade bank, while individual senior unsecured bonds, subordinated and regulatory capital instruments, and foreign-currency bonds require additional verification of ratings, ranking, loss absorption, foreign-currency liquidity, and related-party risk.

13. Sources

Company and primary sources

• Philippine Stock Exchange EDGE, Philippine National Bank financial reports page, including FY2025 annual and Q1 2026 quarterly summary. Used to verify total assets, liabilities, equity, revenue, net income, and EPS at end-2025 and end-March 2026.
  https://edge.pse.com.ph/companyPage/financial_reports_view.do?cmpy_id=139
• Philippine National Bank, Investor Relations page. Used to identify the location of official IR materials, SEC filings, financial performance information, and PSE filings.
  https://www.pnb.com.ph/index.php/investor-relations?id=260
• Philippine National Bank, Investor Presentation 1H 2025, distributed via Publicnow / MarketScreener, August 13, 2025. Used to verify domestic branch count, ATMs, overseas offices, business overview, main products, and history as of June 2025.
  https://www.marketscreener.com/news/philippine-national-bank-investor-presentation-pnb-investor-presentation-1h-2025-ce7c51dad081f126
• Philippine Stock Exchange EDGE, LT Group, Inc. SEC Form 17-A summary for FY2025. Used to verify LT Group consolidated information and PNB-related Basel III capital information included in searchable disclosure extracts.
  https://edge.pse.com.ph/downloadHtml.do?file_id=1873249

Rating, sector and news sources

• BusinessWorld, "Moody's upgrades PNB's credit rating", April 16, 2025. Used as supplementary confirmation of Moody's 2025 upgrade, Baa2 / P-2, and BCA-related information.
  https://www.bworldonline.com/banking-finance/2025/04/16/666235/moodys-upgrades-pnbs-credit-rating/
• BusinessWorld, "Moody's affirms Philippine banks' ratings", April 15, 2026. Used as supplementary confirmation of Moody's 2026 rating affirmation, Baa2 / P-2, Stable outlook, and peer comparison.
  https://www.bworldonline.com/banking-finance/2026/04/15/742845/moodys-affirms-philippine-banks-ratings/
• Philstar, "PNB profit up 20% to P25.3 billion", February 24, 2026. Used as supplementary confirmation of 2025 net income, ROE, loan growth, NIM, deposits, and management comments.
  https://www.philstar.com/business/2026/02/24/2509927/pnb-profit-20-p253-billion
• GMA News Online, "PNB profit rises 20% in 2025 as deposits top P1 trillion", February 23, 2026. Used as supplementary confirmation of 2025 net income, loans, deposits, NPL ratio, and reported asset ranking as of September 2025.
  https://www.gmanetwork.com/news/money/companies/977515/pnb-profit-rises-20-in-2025-as-deposits-top-1-trillion/story/
• Philstar, "PNB posts higher income in Q1", April 28, 2026. Used as supplementary confirmation of Q1 2026 net income, net interest income, net fees, loans, deposits, CASA, ROA, ROE, NPLs, and Moody's-related comments.
  https://www.philstar.com/business/2026/04/28/2523991/pnb-posts-higher-income-q1
• Context.ph, "PNB posts higher Q1 profit on loan growth, steady income", April 27, 2026. Used as supplementary confirmation of Q1 2026 net income, loans, deposits, CASA, ROA, ROE, NPLs, and Moody's recognition.
  https://context.ph/2026/04/27/pnb-posts-higher-q1-profit-on-loan-growth-steady-income/
• GMA News Online, "PH financial system resilient in H2 2025 - BSP", May 7, 2026. Used as supplementary confirmation of Philippine banking system assets, deposits, loans, NPLs, and loan-loss coverage at end-2025.
  https://www.gmanetwork.com/news/money/economy/986729/ph-financial-system-resilient-in-h2-2025-bsp/story/
• StockAnalysis, Philippine National Bank financials and company profile pages. Used as supplementary confirmation of PNB’s overview and historical financials.
  https://stockanalysis.com/quote/pse/PNB/financials/

Unverified / Pending

• The full text of PNB’s 2025 SEC Form 17-A, the full text of the Q1 2026 SEC Form 17-Q, and Pillar 3 / Basel III disclosures have not been obtained directly.
• Detailed confirmation from primary sources remains pending for LCR, NSFR, CASA, currency-specific maturities, deposit concentration, provision coverage, credit costs, Stage 2 / Stage 3, restructurings, sector-level lending, single-name large exposures, and related-party transactions.
• The original Moody's reports for the 2025 upgrade and 2026 rating affirmation have not been obtained, and media-report summaries are used as supplementary information. Rating notching for individual senior unsecured bonds, foreign-currency bonds, and subordinated or regulatory capital instruments is unverified.
• The latest original ratings reports on PNB from S&P, Fitch, and domestic rating agencies have not been verified.
• LT Group’s exact ownership percentage in PNB, direct and indirect control chain, and presence or absence of any support agreement are unverified.
• For individual bonds, the presence or absence of government guarantee, parent guarantee, support agreement, keepwell, or other explicit support arrangement is unverified because offering circulars have not been reviewed.
• Offering circulars, issuers, currencies, maturities, covenants, change of control, cross default, negative pledge, and non-viability / write-down / bail-in language for outstanding foreign-currency bonds, MTNs, ASEAN Sustainability Bonds, and subordinated or regulatory capital instruments are unverified.
• Live spreads, prices, yields, OAS, CDS, and relative value versus same-maturity Philippine bank bonds for PNB senior, subordinated, and foreign-currency bonds have not been verified. Therefore, this report does not make specific buy / sell / hold judgments or cheap / rich assessments.