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Metrobank’s income before provisions increases 41%; Net profit from P9M to P11.0B
(The Philippine Star) – Nov 1, 2020 – 2:04 pm
MANILA, Philippines – Metropolitan Bank & Trust Company (Metrobank) reported that revenue before provisions grew 41% to P52.4 billion, allowing the Bank to reserve additional provisions for bad loans in light of ongoing pandemic conditions. Metrobank announced a 9-month net income of P11 billion.
“Our results are relatively strong across the board. Total revenue grew 20% to P96.3 billion, income before provisions increased 41% to P52.4 billion, and net interest margin further improved to 4.1%, while deposits and equity levels fell. keep very healthy. Amid the effects of the pandemic that looms over the economy, the Bank’s overall performance is better than expected ”. Metrobank President Fabian S. Dee said. “Even though nonperforming assets are currently within manageable levels, our strategy is to be conservative and build reserves in the event that the crisis continues,” added Mr. Dee.
While the past due portfolio (NPL) has 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 of provisions recorded in the same period of the year past. As a result, NPL coverage increased to 174% from 96% previously, in support of the Bank’s conservative provisioning strategy.
As of September 2020, the delinquency rate increased to 2.25% from 1.52% in the same period last year. The increase in non-performing loans remains within expectations amid a slowdown in the economy.
Meanwhile, deposits held up relatively well, increasing 10% to 1.7 trillion pesos, driven by 22% growth in low-cost deposits. The CASA index improved further to 71% from 64% a year ago. The healthy growth of deposits, accompanied by the reduction of 175 basis points in official rates, helped to alleviate the cost of financing in the first nine months of the year, driving the improvement of the net interest margin by 20 basis points to 4 ,1%.
As the global health crisis continues to constrain economic activity, net loans and accounts receivable contracted 13% year-on-year to P1.2 trillion. Commercial lending slowed as clients postponed expansion plans and used excess liquidity to pay off debt obligations. Consumer loans declined similarly amid economic uncertainty, which limited consumption to essential goods and deterred high spending.
Non-interest income increased 28%, driven by strong trading and FX gains of P17.8 billion. Meanwhile, service fees and commissions remained weak, decreasing by 10% mainly due to lower transaction volumes and the 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 expense growth slowed to 2% year-on-year to P43.9 billion, underscored by ongoing efforts to improve productivity and efficiency, and cost management of items deemed nonessential in current business conditions.
Metrobank is one of the strongest and best capitalized banks in the country. The Bank believes that its strong capital position and the strength of its balance sheet will provide it with broad support as it navigates these uncertain times. Capital ratios are among the highest in the industry, with total CAR at 19.9% and Common Equity Tier 1 (CET1) at 19.0%, while consolidated assets stood at P2.4 trillion at the end of September 2020.
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