Metrobank’s income before provisions surged 41%; 9mos net profit at P11.0 billion

Metropolitan Bank & Trust Company (Metrobank) reported that income before provisions grew by 41% to P52.4 billion, which enabled the Bank to set aside additional provisions for bad loans in view of the ongoing pandemic conditions. Metrobank announced a 9-month net income of P11 billion.

“Our results are relatively strong across the board. Total revenues grew 20% to P96.3 billion, income before provisions increased by 41% to P52.4 billion, and net interest margin improved further to 4.1%, while deposits and capital levels remain very healthy. Amidst the effects of the pandemic looming over the economy, the Bank’s overall performance is better than expected.” said Metrobank President Fabian S. Dee. “Even though non-performing assets are currently within manageable levels, our strategy is to be conservative by building reserves in case the crisis drags on,” added Mr. Dee.

While non-performing loans (NPL) have been relatively manageable so far, the Bank has set aside P35.4 billion in provisions for bad loans, almost five times more than the P7.8 billion provisions booked in the same period last year. As a result, the NPL cover went up to 174% from 96% previously, supportive of the Bank’s conservative provisioning strategy.

As of September 2020, the NPL ratio rose to 2.25% from 1.52% in the same period last year. The increase in NPLs remains within expectations amidst a slowdown in the economy.

Meanwhile, deposits held up relatively well, increasing by 10% to P1.7 trillion, propelled by the 22% growth in low-cost deposits. CASA ratio further improved to 71% from 64% a year ago. Healthy deposit growth accompanied by the 175 basis point reduction in policy rates helped ease funding cost in the first nine months of the year, driving net interest margin improvement by 20 basis points to 4.1%.

As the global health crisis continues to constrain economic activities, net loans and receivables contracted by 13% year-on-year to P1.2 trillion. Commercial lending sustained a slowdown as clients deferred expansion plans and used excess liquidity to pay down debt obligations. Consumer loans similarly declined amid economic uncertainty, which limited consumption to essential goods and deterred big-ticket spending.

Non-interest income rose 28%, lifted by robust trading and FX gains of P17.8 billion. Meanwhile service fees and commissions remained weak, declining by 10% primarily due to lower transaction volumes and waiver of some fees.

Despite the challenging environment, the Bank’s cost-to-income ratio improved to 46% from 54% previously. This was achieved as operating expenses growth slowed down to 2% year-on-year to P43.9 billion, underscored by continued efforts to enhance productivity and efficiency, and cost management of items deemed non-essential under the present business conditions.

Metrobank is one of the strongest and well-capitalized banks in the country. The Bank believes that its robust capital position and balance sheet strength will provide ample support as it navigates through these uncertain times. Capital ratios are among the highest in the industry, with total CAR at 19.9% and Common Equity Tier 1 (CET1) ratio at 19.0%, while consolidated assets stood at P2.4 trillion at the end of September 2020.