Philippine tycoon Tan's bank brings forward property listing

[MANILA] Billionaire Lucio Tan's Philippine National Bank (PNB) brought forward its plan to list its property unit, now aiming to float the asset by the end of this year to boost capital.

That puts the listing of PNB Holdings ahead of the original 2023 schedule and will generate about 10 billion pesos (S$263 million) of additional capital, president and chief executive officer (CEO) Wick Veloso said in an interview.

"As we continue to aspire for growth, we are going to need capital," Veloso, 56, said. The lender had plans that didn't push through because it was held back by its nonperforming loans, and "we need to resolve our NPL issue first before we can proceed".

The rejigged plans at the firm that was once the country's biggest bank comes as Tan's business portfolio grapples with the aftermath of the pandemic shock that also sent its airline into bankruptcy.

Veloso, who was CEO of HSBC Holdings's Philippine unit before joining PNB, said he also hopes to increasingly wind back almost 30 billion pesos of remaining provisions that the Tan-owned lender set aside during the Covid-19 crisis. Listing the PNB Holdings unit will help unlock the value of key properties, paving the way for a resumption of the bank's search for a strategic investor to help grow retail lending, he said.

PNB's share price has lagged the Philippine Stock Exchange Index's more than 50 per cent rebound from its pandemic nadir in March 2020.

Other Insights

• Excluding acquired assets, provisions and one-off items, PNB can sustain an ROE of at least 7 per cent in the next 3 years and could reach 10 per cent this year
• In 3 years, Veloso seeks to cut the share of large corporates to 25 per cent from 66 per cent currently and raise retail, which provides fatter margins, from 9 per cent to 25 per cent
• A key to boosting profitability is to raise its net interest income margin by increasing low-cost funds through PNB's cash management services

Still, foreign investors have continued to ask him about Tan's successor ever since the death of the tycoon's expected heir Lucio Tan Jr in November 2019, Veloso said.

"I have insulated the bank as much as possible," he said, adding "that's a question I can't answer" and a matter that only Tan and his family can decide. BLOOMBERG