Philippine National Bank

July 22, 1999 PSE CIRCULAR FOR BROKERS NO. 1817-99 SUBJECT : Philippine National Bank In reply to the Exchange's query regarding a news article published in the July 21, 1999 issue of Today, which reported that Philippine National Bank ("PNB") recorded more bad loans in the second quarter, causing its non-performing loans to shoot up to 26 percent of total loans as of end-June from the end-March level of 21 percent, PNB, in a letter to the Exchange clarified that: " . . .The non-performing loans of PNB was recorded at 28% as of the 2nd quarter (per interim financial statements) of this year, and not 26% as earlier quoted by the newspapers today. We wish to note that the 7% increase in the NPL ratio from what was reported last quarter can be accounted for by the following: 3% was due to the decline of the total loan portfolio, while 4% was due to the increase in non-performing loans. Furthermore, the increase in non-performing loans for the period included the temporary recognition of Philippine Airlines (PAL) account as non-performing. However, we understand that the rehabilitation plan for PAL has already been approved and we expect that the account will then revert to current status. . . " For your information. (SGD.) JOSE LUIS U. YULO, JR. President and CEO