053107: Due Diligencer: PNB Dividend

PNB dividend. Philippine National Bank (PNB) has not distributed dividends either in cash or stock for several years now because it does not have surplus or retained earnings. What the bank has been reporting to its stockholders over the years are losses. PNB president Omar Byron Mier said the distribution of dividends will be made only after wiping outs its huge accumulated deficits and paying the remaining P6.1 billion it still owes the Philippine Deposit Insurance Corp. (PDIC) before the end of 2007.   Financial performance.  Four years from now, PNB should be able to make good its promise to its stockholders should it make P1-billion profit each year from 2007 to 2009. If it maintains what Mier described as “strong momentum of profitability,” PNB expects a surplus by 2010 for distribution as dividend. Based on its recent financial performance, dividends are a big possibility. In the fist quarter of 2007, the bank’s net income surged 59.924 percent to P308.269 million from P192.759 million in the same period last year. This profit further reduced its accumulated deficit to P2,417,114,000. PNB reported consolidated net income of P820.029 million in 2006; P627.538 million in 2005; and P358.536 million in 2004. Minus those of its units, PNB’s profit amounted to P705.781 million in 2006; P250.978 million in 2005; and P38.749 million in 2004. Its deficit amounted to P3,980,989,000 in 2006, down from P4,926,731,000 in 2005.  Bad loans. PNB was one of the big lenders caught by a wave of petitions for the suspension of debt payments filed with the Securities and Exchange Commission in (SEC) 1980s and 1990s. A report prepared by the SEC listed Philippine Airlines, which is also under rehabilitation, as one of the biggest borrowers of PNB; its $80,350,442.64 debts consisted of $14,251,576.32 in long-term loans and $66,098m866.32 in short-term loans. PNB’s exposures in a number of ailing companies, which were placed by the SEC under rehabilitation amounted to P2,492,734,363.24. Among PNB’s biggest borrowers which have been placed under rehabilitation were Philippine Blooming Mills with P122 million; Arcam & Co., P194.59 million; and Victorias Milling Co., P813.341 million.   Equity update. PNB’s authorized capital stock is made up of 1,054,825,557 common shares and 195,175,444 preferred shares. Of the common shares, the government owns 17,454,140 shares equivalent to 3.05 percent while Tan, through various companies he controls, owns 443,879,707 common shares, or 77.43 percent. PDIC holds 54,357,751 nonvoting preferred shares, or 9.48 percent. The three stockholders combine for 89.96-percent leaving the public with the equivalent of 10.04 percent. This equity makeup will change when PNB implements its planned stock rights offering which will increase the bank’s public float to 33 percent but will dilute LTG (Lucio Tan group) to 66 percent. The government plans to join the stock rights offering by selling both common shares and preferred shares.   Successful rehabilitation. PNB shares, despite a free float of only 57,435,739 shares, or 15.192 percent of 378,070,472 outstanding shares, are actively traded again. From P22 in 2002, PNB shares soured 143.18 percent to hit a high of P53.50 on May 29, 2007. Its market performance shows its rehabilitation is succeeding on P25-billion financial assistance from the PDIC and the Bangko Sentral ng Pilipinas.

 

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