Ty family-led Metropolitan Bank and Trust Co. plans to raise fresh capital estimated at more than P70 billion to expand its fast-growing loan book, riding on the country’s strong macroeconomic prospects.
In a disclosure to the Philippine Stock Exchange on Wednesday, the country’s second-biggest lender said its board had approved a stock rights offering of up to a maximum of 819.83 million common shares equivalent to the remaining unissued shares from its authorized capital stock.
“Timing and size of the transaction are subject to other details such as the offer price and are subject to receipt of regulatory approvals as well as market and other conditions,” the disclosure said.
Metrobank has mandated UBS as joint global coordinator and joint bookrunner and First Metro Investment Corp. as joint global coordinator, joint bookrunner and issue manager.
Metrobank, which has grown its loan book by more than 20 percent in the last six quarters, said it believed that the robust growth of the Philippines would continue to boost loan demand across the various segments of the economy.
“The capital raising exercise is expected to enable the bank to pursue these business prospects to sustain the loan growth momentum, leveraging on the bank’s sales and distribution network that has rapidly expanded in the preceding years. To that end, the bank intends to focus on enhancing customer experience through digitization initiatives and branch efficiencies,” Metrobank said.
As part of the bank’s strategy to focus on higher-margin segments, a portion of the equity sale proceeds would also be used for the acquisition of the remaining 20-percent equity stake in Metrobank Card Corp., a leading credit card issuer in the country.
In a research note, leading online stockbrokerage COL Financial said that assuming the sale of the entire shares at an offer price of P85 each—which assumes a 20-percent discount from Tuesday’s closing price—core tier 1 capital and overall capital adequacy ratio (CAR) of Metrobank would increase to 17 percent and 20 percent, respectively. As of end-September, their respective levels were at 16 percent and 13.3 percent.
However, COL Financial said the bank’s ROE (return on equity) would also be diluted with the larger capital base to 8.5 percent from 10.8 percent this year.
As such, COL Financial said the planned stock rights offering could put pressure on Metrobank’s price in the short term as the market anticipates dilution from additional shares.
Shares of Metrobank fell by 7.76 percent to close at the stock market at P98.70 per share yesterday, giving it a market capitalization of P340.3 billion.
Metrobank said it sought to “capitalize on the growth opportunities of large-cap corporates and especially in its core franchise, the middle market and small-to-medium enterprises (SME) segments.”