Metrobank’s income before provisions climbed 41% to P52.4B in nine months

Metropolitan Bank and Trust Company said Friday income before provisions climbed 41 percent to P52.4 billion in the first nine months from a year ago on the back of a 20-percent increase in revenues.

The higher profit enabled the bank to set aside additional reserves for bad loans in view of the global health crisis. Metrobank’s net income in the same period reached P11 billion.

“Our results are relatively strong across the board. Total revenues grew 20 percent to P96.3 billion, income before provisions increased by 41 percent to P52.4 billion and net interest margin improved further to 4.1 percent, while deposits and capital levels remain very healthy. Amid the effects of the pandemic looming over the economy, the Bank’s overall performance is better than expected,” said Metrobank president Fabian 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,” Dee said.

The bank said while non-performing loans were relatively manageable so far, it set aside P35.4 billion in provisions for bad loans, or almost five times more than the P7.8 -billion provisions it booked in the same period last year. As a result, the NPL cover went up to 174 percent from 96 percent previously, supportive of the bank’s conservative provisioning strategy.

Metrobank said that as of end-September, the NPL ratio rose to 2.25 percent from 1.52 percent in the same period last year. The increase in NPLs remained within expectations amid a slowdown in the economy, it said.

Deposits held up relatively well, increasing by 10 percent to P1.7 trillion, propelled by the 22-percent growth in low-cost deposits. CASA ratio improved to 71 percent from 64 percent 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, driving net interest margin improvement by 20 basis points to 4.1 percent.

As the global health crisis continues to constrain economic activities, net loans and receivables contracted by 13 percent 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 also declined amid economic uncertainty, which limited consumption to essential goods and deterred big-ticket spending.

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

The bank said that despite the challenging environment, the cost-to-income ratio improved to 46 percent from 54 percent previously. This was achieved as operating expenses growth slowed down to 2 percent 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 percent and Common Equity Tier 1 ratio at 19.0 percent, while consolidated assets stood at P2.4 trillion as of end-September.