Metrobank nets P18B

Ty family-led Metropolitan Bank and Trust Co. booked a 2.89 percent decline in net profit last year to P18.1 billion, attributed to slower growth in interest earnings, lower profit from sale of foreclosed assets and higher loan loss provisioning.

For the fourth quarter alone, net profit rose by 3 percent to P5.5 billion, the bank said in a press statement on Friday.

In a research note, COL Financial said that the decline in Metrobank’s full-year net profit had resulted from a weaker-than-expected growth in net interest income alongside higher-than-expected provisioning.

The banking group’s provision for credit and impairment losses increased by a hefty P5.28 billion or 256.58 percent to P7.34 billion.

The full-year results translated to a return on equity of 9.28 percent versus the previous year’s 10.83 percent.

Metrobank’s net interest income increased by 8.11 percent to P52.95 billion as the bank expanded its loan book while generating low-cost funds.

Total resources peaked at P1.9 trillion while total deposits reached P1.4 trillion and total loans hit P1.1 trillion – all reaching record high levels.

Metrobank said its 2016 performance was driven by sustained low-cost funds generation, which in turn supported the rapid expansion of commercial loans. Last year, the bank grew its loan book faster than industry and strategically re-positioned its balance sheet to provide a steady source of recurring income.

The bank grew its loan book by 20 percent to breach the P1 trillion mark. The total loan portfolio of P1.1 trillion accounted for 57 percent of total assets versus 50 percent in the previous year.

The commercial segment led the lending growth, rising 22 percent year-on-year as the bank supported the long-term capital expenditure requirements of its corporate clients as well as the working capital needs of the middle market and small and medium enterprise (SME) customers. The consumer segment on the other hand, maintained a growth of 16 percent, with auto loans growing fastest among the Bank’s consumer assets.

The bank’s low-cost deposits kept a high growth rate of 21 percent to reach P846 billion. Low-cost deposits – referring to current account and savings accounts – accounted for 61 percent of total deposits compared to 56 percent a year ago, providing the liquidity to support loan growth.

Metrobank reported that despite intense competitive pressures, the strong low-cost deposit generation and loan growth expansion allowed the bank to keep net interest margins steady for the year at 3.54 percent, one of the highest among peers.

Overall, the bank’s total revenues for 2016 increased by 16 percent to P78.2 billion.

Total non-interest income increased by 37 percent to P25.2 billion. This came from P11.6 billion in service charges, fees and commissions and trust operations; P8.1 billion in net trading and foreign exchange gains and P5.5 billion in other income. The group reported a lower profit from disposal of foreclosed properties of P730 million compared with P1.29 billion in 2015.

Meanwhile, operating expenses grew by 11 percent to P44.2 billion, driven mainly by manpower-related costs, in line with plans to hire client-facing personnel to improve customer coverage. Other cost items were kept at a more manageable single-digit growth, notwithstanding the continued investment in technology, marketing, and customer acquisition initiatives.


On asset quality, Metrobank capped its bad loans at 0.94 percent of total loans even as lending activities accelerated. Non-performing loan coverage was at 113 percent.
 
By yearend, total capital adequacy ratio (CAR) was at 15.5 percent of risk assets with common equity tier 1 (CET-1) ratio at 12.5 percent.
 
In terms of network reach, Metrobank ended the year with 959 branches and 2,305 ATMs (automated teller machines) nationwide. Over 50 percent of the group’s branches are located outside Metro Manila, positioning Metrobank to take advantage of the high growth areas of the country.