Metropolitan Bank & Trust Co. (Metrobank) expects another 50-basis point (bp) interest rate hike after the Bangko Sentral ng Pilipinas’ (BSP) Monetary Board meeting today, Sept. 22, as the regulator seeks to control the inflation contagion and calm volatile foreign exchange movements.
The BSP was seen to follow up with further hikes on expectations consumer prices will remain elevated in the coming months, said Fernando Antonio Tansingco, Metrobank treasurer and head of financial markets.
“We think [we will see] 50 basis points [on Thursday] but hopefully we can increase at a faster pace. Then the pace of the peso depreciation will slow down,” he told reporters on Wednesday.
The Philippine peso touched a new record low of P58 on Wednesday, bringing losses against the dollar to about 13.7 percent this year.
The central bank had raised rates by 1.75 percent since May to combat the surge in consumer prices. Last August, it implemented a 50 basis point hike to 3.75 percent.
Tansingco warned of further downside risks for the peso unless global inflation fears start to ease.
Meanwhile, Metrobank would stay conservative and maintain the current level of provisions for bad debts given prevailing economic uncertainties, he noted.
“We are still not yet out of the woods. We have to see inflation come down, we have to see stability in [foreign exchange] rates before we can,” Tansingco said.
Metrobank’s cover for nonperforming loans (NPLs) stood at 196 percent in the first half of 2022 while NPLs to total loans stood at 1.9 percent, which was below the industry average.
“I think our provisions are at the correct level. It’s appropriate for the uncertainties we see right now,” Tansingco said.
Led by the Ty family, Metrobank earlier said first half 2022 profits were bolstered by a strong second quarter as interest earnings rose while expenses for bad loans were sharply lower.
Net income from January to June jumped 33 percent to P15.6 billion.
From April to June, the country’s second-biggest lender saw profits nearly double to P7.6 billion.
Gross loans during the first half expanded 9 percent to P1.3 trillion. Metrobank said corporate and commercial lending grew 12 percent while the credit card segment rose 16 percent.