METROPOLITAN BANK & Trust Co. (Metrobank) booked a lower net income in the second quarter as it continued to boost its loan loss provisions amid the pandemic.

Metrobank booked a net income of P3.126 billion in the second quarter, its quarterly report showed. This is down 51.8% from the P6.48-billion profit it posted in the same quarter last year.

Net income attributable to the equity holders of the parent company stood at P3.008 billion last quarter, down from last year’s P6.277 billion. For the first semester, its attributable net income sank 30% to P9.13 billion.

“This 30% decline from last year’s P13 billion income is a result of proactive measures to secure the bank from further economic slowdown that may result from the continuing COVID-19 pandemic,” it said in a statement.

Metrobank set aside P22.8 billion in the first half for loan loss provisioning as it factored in the crisis’ impact on its credit portfolio. This is five times bigger than the P4.6 billion in provisions set aside in the same period in 2019.

“Consistent with our conservative business strategy, we are very mindful of future risks that will likely impact the entire banking industry, so we are doing an early build-up of larger provisions to ensure our readiness,” Metrobank President Fabian S. Dee was quoted as saying.

The bank’s financial statement showed provisions for credit and impairment losses surged to P17.7 billion in the second quarter alone from the P2.1 billion set aside in the comparable year-ago period.

Metrobank’s net interest income rose 25% to P23.069 billion from P18.421 billion a year ago, backed by an increase in gains from trading and securities amid lower income from loans and receivables. Net interest income after loss provisions stood at P5.328 billion, lower by 67% from the P16.225 billion seen last year.

Meanwhile, other operating income more than doubled to P14.996 billion against the P7.26 billion last year, supported by higher trading, securities, and foreign exchange gains amid lower gains from service charges, fees and commission.

Other expenses increased 5.47% to P15.07 billion from P14.29 billion due to higher compensation and fringe benefits that offset lower occupancy and equipment-related costs.

For the first half, Metrobank’s non-interest income jumped 55% on the back of the P13.1 billion in trading and foreign exchange gains.

Its cost-to-income ratio improved to 45% from 56% amid muted operating cost growth of 7% to P29.6 billion.

The bank’s net loans and receivables slipped 5% to P1.3 trillion as of June. The bank’s commercial loan segment was tempered amid business climate uncertainties while consumer lending was backed by steady mortgage and increased credit card receivables despite the 6% drop in auto loans.

Its nonperforming loans ratio stood at 1.56%, up from 1.5% last year, with NPL cover increasing to 188%.

Meanwhile, Metrobank’s deposit base increased 5% to P1.7 trillion, supported by the 20% increment in low-cost deposits. This also improved the current account savings account ratio to 69% from 61% a year ago.

“This, together with the 175-basis-point drop in policy rates, led to the marked reduction in the bank’s overall funding cost thus resulting in net interest margin improving by 41 basis points to 4.24%,” it said.

Metrobank’s consolidated assets stood at P2.3 trillion as of end-June while total equity was at P323 billion. Its capital adequacy ratio and common equity Tier 1 ratio were at 19.98% and 18.66%, respectively, both higher than the regulatory requirements.

The Metrobank Group’s return on equity (RoE) was at 5.78% as of June, down from 8.99% previously, while return on assets (RoA) dropped to 0.77% from 1.15%.

For Metrobank alone, RoE was at 5.68% versus 8.69% last year while RoA slipped to 0.89% from 1.38%.

Metrobank’s shares closed trading at P33.50 apiece, slipping by 75 centavos or by 2.19% from its previous finish. — LWTN

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