PSE Circular for Brokers No. 2608-98

November 18, 1998 PSE CIRCULAR FOR BROKERS NO. 2608-98 SECURITIES AND EXCHANGE COMMISSION SEC FORM 11-C CURRENT REPORT UNDER SECTION OF THE REVISED SECURITIES ACT (RSA) AND RSA RULE 11(a)-1(b)(3) THEREUNDER 1. November 17, 1998 Date of Report (Date of earliest event reported) 2. SEC ID No. AS096-005555 3. BIR Tax Identification No. 000-188-209 4. Exact name of registrant as specified in its charter: Philippine National Bank 5. Philippines Province, country or other jurisdiction of incorporation or organization 6. [ ] (SEC Use Only) Industry Classification Code: 7. PNB Financial Center, Roxas Boulevard, Pasay City 1300 Address of principal office Postal Code 8. (632)/891-60-40 up to 70 Registrant's telephone number, including area code 9. Not applicable Former name, former address, and former fiscal year, if changed since last report 10. Securities registered pursuant to Sections 4 and 8 of the RSA Title of Each Class Number of Shares of Common Stock Outstanding and Amount of Debt Outstanding Common stock, P100 par value 137,480,171 shares 11. Indicate the item numbers reported herein: Item 9 PNB Explains 1998 third Quarter Results of Operations PNB EXPLAINS 1998 THIRD QUARTER RESULTS OF OPERATIONS THE REPORTED 1998 THIRD QUARTER NET LOSS OF THE BANK OF P500 MILLION WAS NOT DUE TO LOSSES FROM CURRENCY SPECULATION. AS A MATTER OF POLICY, THE BANK TAKES FOREIGN CURRENCY POSITION ONLY WITHIN ACCEPTABLE LIMITS SO AS NOT TO ENDANGER THE CAPITAL OF THE BANK. THE P637 MILLION REPORTED TRADING AND FOREIGN CURRENCY LOSS ACTUALLY CAME FROM THE RECLASSIFICATION OF PROVISIONS FOR MARKET DECLINE OF TRADING ACCOUNT SECURITIES TOTALLING P436 MILLION TO TRADING LOSS, IN COMPLIANCE WITH THE REQUIREMENT OF BSP CIRCULAR NO. 161 AND THE ADJUSTMENT OF ABOUT 350 MILLION PROFIT FROM EXCHANGE FROM FOREIGN CURRENCY SWAP TRANSACTIONS DUE TO TIMING DIFFERENCE IN THE RECOGNITION OF PROFIT OR LOSS ON FX SWAP TRANSACTIONS. THIS TIMING DIFFERENCE HAS ALREADY BEEN ADDRESSED WITH THE CHANGE IN ACCOUNTING PROCEDURE. WITHOUT THIS REVERSAL IN FOREIGN EXCHANGE PROFIT NET LOSS SHOULD HAVE BEEN REDUCED TO ABOUT P150 MILLION ATTRIBUTABLE PARTLY TO PERSONNEL COST ARISING FROM THE NEWLY SIGNED COLLECTIVE BARGAINING AGREEMENT. THE CREDIT BALANCE OF THE PROVISIONS FOR PROBABLE LOAN AND OTHER LOSSES OF P448 MILLION WAS ACCOUNTED FOR MAINLY BY THE RECLASSIFICATION MENTIONED ABOVE.