Land Bank of the Philippines reported a net income of P5.4 billion in the first three quarters, up 41 percent year-on-year.

Land Bank, a government financial institution and one of the country’s top five banks, recently raised its income forecast to P6.5 billion from P5.5 billion for 2009 after a strong first-half performance. The bank surpassed its six-month target and is now hoping to earn P3 billion more in the second half.

Land Bank President and CEO Gilda E. Pico said in a statement that the “consistent improvement of its profitability” was due to higher income on loans and investments, the effective management of the deposit portfolio and other “major cost elements (as well as) the deepening of customer relations.”

“We are continuously strengthening our financial base and organizational capabilities in order to serve our priority sectors especially the farmers and fisherfolk, microenterprises and SMEs, local government units and agribusiness enterprises,” Pico said.

As of end-September, Land Bank assets expanded by 35 percent to P512 billion while gross loan portfolio went up by 27 percent to P177.9.6 billion. Deposit base, in the meantime, grew by 37 percent to P399.3 billion while capital was higher by 40 percent to P46.1 billion in the same period.

Pico said the bank’s regular loan portfolio also increased by 25 percent to P179.3 billion in the third quarter while its non-performing loans ratio improved to a low 3.2 percent from 3.8 percent last year. The industry average ratio was 3.5 percent.

The GFI’s non-performing assets ratio was at 3.03 percent compared to the industry average ratio of 4.29 percent. Real and other properties acquired decreased to P7.8 billion from P10 billion a year ago, added Pico.

While Land Bank has an approval to issue as much as $100 million in hybrid tier 1 notes, the bank is under no pressure to do it since its capital to risks ratio still stands at 17.7 percent, well above the regulatory requirement of 10 percent.

But even minus capital issue, the bank is expecting a total of P13.12 billion in foreign funds from official development assistance.