Metrobank profit up 27.1% on solid fee-based revenues, trading yields

Ty family-led Metropolitan Bank & Trust Co. attained a 27.1-percent year-on-year growth in first quarter net profit to P7.8 billion, driven by stable fee-based earnings and a much larger treasury windfall.

“Our strategy and prudent approach last year paved the way for a strong start in 2021,” Metrobank president Fabian Dee said in a disclosure to the Philippine Stock Exchange on Monday.

The first quarter results translated to a return on equity of 9.87 percent, improving from 7.98 percent a year ago.

“Our capital position is double the regulatory minimum, with capital adequacy ratio (CAR) of 19.9 percent and common equity tier 1 (CET1) of 19 percent. Our reserves also cover 166 percent of our non-performing loans (NPL). This ensures that Metrobank will sustain its business resilience, and we remain confident that the bank is ready to take on opportunities as the economy recovers. We are in a strong position to withstand a resurgence in asset quality risks and we remain vigilant even as we all continue to battle the pandemic,” Dee added.

Metrobank’s net interest income fell by 11 percent year-on-year to P19.04 billion as local interest rates dipped while the bank’s loan book declined by 7.58 percent to P1.16 trillion due to the slowdown across the corporate, commercial and consumer loan portfolios.

With the pandemic still raging, the bank said loan demand remained sluggish.

However, non-interest income surged by 28 percent year-on-year to P7.9 billion. Fee-based revenues were stable at P3.3 billion despite business activities still being slower than prepandemic levels. Trust fee income grew by 20 percent year-on-year, in line with the 30-percent growth in assets under management.

Furthermore, securities trading and foreign gains doubled to P2.9 billion as the treasury group realized gains prior to the reversal of yields.

Low-cost deposits grew by 16 percent to P1.3 trillion. Overall deposits, however, declined by 3.27 percent to P1.74 trillion as the bank trimmed high-cost time deposits, in turn mitigating the drop in asset yields arising from interest rate cuts in the past year.

Metrobank noted its balance sheet remained very liquid and ready to support clients when business volumes start improving.

On asset quality, bad loans stood at 2.4 percent of total loans, more stable from the end-2020 level. Restructured loans comprised 0.4 percent of total loans.

The bank set aside provisions of P2.5 billion in the first quarter, 50-percent lower year-on-year, as the bank already provided a significant buffer last year. For every peso of soured loan, the bank has set aside P1.66 as buffer.

Operating expenses were also stable in the first quarter, inching up by 1.4 percent to P14.7 billion from sustained efforts to enhance productivity and operational efficiency. The bank spent 54.6 centavos for every peso earned in the first quarter, a bit higher than 52.71 centavos spent last year.

Metrobank is the country’s second largest bank with consolidated assets of P2.4 trillion and equity of P306.6 billion.