Metrobank keeps $150-M bond option

Local banking giant Metropolitan Bank and Trust Co. is reserving its option to raise an additional $150 million in debt notes qualifying as tier 2 or supplementary capital under the more stringent Basel 3 capital adequacy framework for the rest of the year.

Metrobank earlier raised P16 billion (around $350 million) from the issuance of Basel 3-compliant tier 2 debt notes but it has yet to maximize its leeway from regulators to issue a total of $500 million.

Jette Gamboa, head of strategic planning at Metrobank, said in an interview that the bank remained open to issue the remaining $150 million and would have a year to do so. The bank was not considering any capital call, she said.

The tier 2 notes issued by Metrobank in March were only the second Basel 3 compliant instrument issued in the domestic market with a loss-absorption feature. The first was the P10-billion issuance by state-owned Development Bank of the Philippines late last year. Unlike previous tier 2 notes issued by banks, these instruments are recognized as bank capital in accordance with Basel 3 standards.

Metrobank’s tier 2 notes were priced at a coupon rate of 5.375 percent a year, or 151 basis points over the five-year PDST-F government benchmark. They will mature in June 2024 but Metrobank has the option to redeem or call on the notes early in June 2019.

For this year, the bank sees its loan book growing by at least 15 percent based on the current pace of domestic economic growth.

On the macroeconomic backdrop, Gamboa said the economy would likely grow by at least 6 percent while inflation would remain within the range targeted by the Bangko Sentral ng Pilipinas.

Although there was upward pressure on the key policy rates of the BSP, she said the earlier one-percentage point increase in the reserve requirement had tempered market expectations on the extent of monetary tightening through an increase in overnight policy rates this year.

As Metrobank usually tended to grow its loan book by at least 2 to 2.5 times the pace of the economy, she said this should allow its loan portfolio to expand by at least 15 percent this year.

Net interest margins are seen stabilizing. As competition continued to escalate across market segments, Gamboa said asset yields would come under pressure but this would be mitigated by the bank’s ability to generate low-cost deposits especially with its branch expansion strategy.

Gamboa said Metrobank’s deposit base would grow by 10-12 percent. Doris C. Dumlao