Local banking giant Metropolitan Bank & Trust Co. is likely to grow its net profit by about 35 percent this new year to P28.07 billion, driven by the decline in bad loan buffers, according to an equity research by Singapore-based DBS Group.
DBS has a “buy” recommendation on Metrobank, with a new target price of P68 per share, suggesting a possible upside of 25 percent from current prices.
For full-year 2021, DBS expects Metrobank to post P20.85 billion in net profit, up by 51 percent from the previous year’s level.
“Our view of a better macroeconomic backdrop and potential hikes in interest rates should bode [well] for the bank’s loan book, net interest margin and fee-based income,” DBS said in a research note dated Dec. 27.
“In addition, efficient cost management, complemented by the rise in digital transactions, should contain operating expenditure growth at a single-digit rate in full-year 2022 and 2023,” DBS said.
In 2023, DBS expects Metrobank’s net profit to hit close to P33 billion, rising by 17.6 percent from its projected earnings this 2022. This is seen to translate to P6.24 earnings per share this year and P7.34 per share next year.
DBS expects Metrobank to deliver a 26-percent compounded annual growth rate of earnings per share from 2021 to 2023, while return on equity (ROE) is seen to return to prepandemic level of 9.4 percent by 2023.
Disruptions caused by the pandemic have brought down Metrobank’s ROE to 4.4 percent in 2020 and 6.4 percent in 2021. This year, Metrobank’s ROE is seen to improve to 8.3 percent.
The bank’s loan loss provisions are projected to decline this new year to P8.22 billion and further to P6.09 billion in 2023, coming from P14.22 billion in 2021 and a hefty P40.76 billion in 2020. INQ