PNB Holdings expects 2026 profit to hold up

Manila, Philippines — PNB Holdings Corp. (PHC) anticipates its 2026 profit will remain similar to the 2025 level, despite the ongoing issue of oversupply in office space that continues to impact rental rates and delay expansion plans from tenants. According to PHC's chief financial officer Ponciano Carreon Jr., the company had initially planned for stronger growth this year, but the recent geopolitical tensions between the US and Iran in February have caused a reassessment of expectations.

Carreon stated that while the company may not achieve the growth they initially hoped for, they are still not expecting a decline in performance. In the first half of the year, PHC reported a net income of P209.9 million, which is an increase of 85.3 percent compared to the same period last year. Revenue also rose by 26 percent to P634.3 million.

In 2025, the full-year net income fell by 24 percent to P401.68 million, with revenue declining by 9 percent to P1.21 billion. The strong office demand has been affected as businesses take more time to decide on expansions, while the abundance of available space has increased tenants' negotiating power. PHC's office space in the Bay Area of Pasay is currently about 60 percent occupied, leaving approximately 40 percent vacant, while the overall office vacancy in Metro Manila is around 20 percent.

To adapt to the changing market, PHC is modifying the mix and use of its existing properties instead of relying solely on traditional offices. This includes introducing flexible workspaces, retail outlets, food and beverage facilities, event spaces, and other amenities to align with evolving occupier preferences. The company is also cautious about its larger redevelopment plans, as it does not want to add significant new supply before demand improves.

PHC's Buendia-Paseo site in Makati is considered the most suitable candidate for its first major redevelopment, as it currently generates the lowest return. This 8,000-square-meter property is primarily used for parking and only generates a few million pesos in revenue. PHC's plans for this site are already well underway, but management intends to wait for clearer indications of a market recovery before commencing construction.

If conditions improve, the ground-breaking could occur as early as next year, with a possible completion in 2028 or 2029, depending on the market situation. The redevelopment of the Buendia-Paseo site has the potential to accommodate between 100,000 and nearly 200,000 square meters of floor area, greatly expanding the income-generating space on the site.

The exact investment cost for the project has not been determined, but the redevelopment will require a significant capital expenditure.