Panay is said to have come from “Hay pan!” (literally “There is bread!”)
Etiological legend says, to borrow the phrase of respected art historian Fr. Rene Galende, that when the Spaniards (Miguel Lopez de Legaspi and co.) scoured the nearby islands for food (they were near starvation in Cebu, their first official settlement), they discovered this island abundant in rice. In great relief and joy, they exclaimed “Hay pan.”
Iloilo, on the other hand, comes from Irong-Irong (meaning shaped like a nose)
I used to think it was so because the entire Panay island appears like an irong/ilong . Then I learned that it is Irong-Irong, eventually becoming Iloilo in reference to that patch of land near the mouth of Iloilo river (a delta) shaped like a nose.