Metrobank income rises by 131% on lower bad loan buffer

Ty family-led Metropolitan Bank & Trust Co. grew its third quarter net income by 131 percent year-on-year to P4.4 billion as loan loss provisioning expense declined compared to last year, when pandemic disruptions dragged the economy into a record recession.

This brought the bank’s nine-month net income to P16.1 billion, up by 46 percent year-on-year. This accounted for about 72 percent of the earnings that market consensus expects the bank to deliver for the full year.

“Our strategy to build a stronger balance sheet has given us the capacity to withstand prolonged risks and also enabled us to implement strategies to optimize our operating performance in the medium term,” Metrobank president Fabian Dee said in a disclosure to the Philippine Stock Exchange on Friday.

The third quarter net profit was on a par with the second quarter bottom line, despite the reimposition of tough lockdown measures during the period.

The surge in net profit was mostly driven by the decline in loan loss provisioning. The bank set aside P2.99 billion in third quarter credit buffer compared to P12.58 billion a year ago. For the nine-month period, credit loss provisioning summed up to P10 billion, just 28 percent of the amount booked in the same period last year.

The decline in provisioning was enabled by the improvement in asset quality. Metrobank’s bad loans as a ratio of total loans were contained at 2.1 percent versus 2.25 percent a year ago, well below the industry average of 4.5 percent.

Restructured loans stood at 0.8 percent of total, much lower than the industry ratio of 3.1 percent.

For every peso of bad loans that have gone sour, Metrobank has now set aside P1.91 in loan loss provisions, more conservative than most peers.

The bank’s loan book ended September at P1.17 trillion, slightly easing from P1.25 trillion at end-December last year.

“We will continue to help economic recovery as we see a gradual increase in lending activities, as businesses are more able to adapt to the pandemic,” Dee said.

Metrobank’s net interest income at end-September declined by 14.45 percent year-on-year to P56.34 billion. In the third quarter alone, however, net interest income slightly improved to P18.84 billion from P18.46 billion in the second quarter.

—Doris Dumlao-Abadilla