LANDBANK eyes ‘stable’ start to 2026 on sustained profitability

STATE-RUN Land Bank of the Philippines (LANDBANK) aims to post steady profits next year, with the lender also having enough safeguards against potential asset quality risks stemming from its transactions with government contractors amid increased scrutiny due to a wide-ranging corruption scandal.

“We expect a stable start to 2026, supported by strong 2025 results,” LANDBANK President and Chief Executive Officer (CEO)Lynette V. Ortiz told BusinessWorld in a text message on Dec. 24.

“We aim to sustain profitability, which we’ve demonstrated through the years while ensuring we continue to have strong risk management controls and capital buffers that can withstand emerging risks.”

Asked about the impact of a possible delay in government contractors’ loan repayments amid a graft scandal involving these entities, Ms. Ortiz said: “We maintain confidence in our loan portfolio’s quality, backed by strong risk controls. However, we are monitoring developments closely and will be proactive in managing risks.”

The bank’s net income surged by 41.79% to P35.64 billion in the nine months ended September from P25.14 billion in the same period last year.   

LANDBANK’s net loans stood at P1.22 trillion, up by 4.87% from P1.16 trillion the previous year. Meanwhile, gross loans reached P1.7 trillion at end-September.

Its loan loss provisions decreased by 46.17% year on year to P7.56 billion in the period.

A wide-ranging scandal linking officials of the Public Works department, lawmakers, and private contractors to corruption in allegedly anomalous flood control projects has resulted in increased scrutiny of state-run banks’ transactions with these entities.

Development Bank of the Philippines President and CEO Michael O. de Jesus said this month that they expect their net income to decline by P1 billion to P2 billion this year due to higher provisioning as the corruption scandal has affected repayments by contractors.

LANDBANK said in September that its handling of government transactions and accounts related to the anomalous infrastructure projects were within Philippine banking laws, adding that the funds it that went through the financial institution were legitimate government disbursements.

Jonathan L. Ravelas, a senior adviser at Reyes Tacandong & Co., said state-run banks could see a slight uptick in their nonperforming loans as the corruption mess is expected to continue stalling government projects and affecting the overall economy, which could affect their lending.

“They’re already setting aside P1-2 billion in provisions, which will trim net income but keep risks contained,” he said.

“The real watchpoint is how fast government spending normalizes — because prolonged delays could tighten lending, especially for MSMEs (micro, small, and medium enterprises).”

Meanwhile, Ms. Ortiz said they are still finalizing their planned sustainability bond issuance, which the bank earlier said could happen by next quarter.

“We are carefully assessing market conditions to ensure timing aligns with investor confidence.”

She earlier said the bank is eyeing to raise over P20 billion from a sustainability bond offering. The papers will be branded as “Asenso bonds” and are expected to have a tenor between one and five years, and could also be issued in multiple tranches. — Aubrey Rose A. Inosante