Metrobank 9 months pre-provision income up 41%; net profit P11.0 billion

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Metropolitan Bank & Trust Co. (Metrobank) said it booked a 41% increase in income before provisions to P52.4 billion for the nine months to September, a performance which it described as exceeding expectations despite the economic crisis.

On a net profit basis, the nine-month result was P11 billion, down 49.5% from the year-earlier outcome of P22.2 billion, it said in a disclosure to the exchange. It attributed the drop to “the ongoing pandemic conditions.”

“Our results are relatively strong across the board. Total revenues grew 20% to P96.3 billion, income before provisions increased by 41% to P52.4 billion, and net interest margin improved further to 4.1%, while deposits and capital levels remain very healthy. Amidst the effects of the pandemic looming over the economy, the Bank’s overall performance is better than expected,” according to Metrobank President Fabian S. Dee. “Even though non-performing assets are currently within manageable levels, our strategy is to be conservative by building reserves in case the crisis drags on.”

The bank set aside P35.4 billion in provisions for bad loans, almost five times the year-earlier total of P7.8 billion.
“As a result, the NPL (non-performing loan) cover went up to 174% from 96% previously, supportive of the Bank’s conservative provisioning strategy,” it said in a statement.
In September, the NPL ratio rose to 2.25% from 1.52% a year earlier.

It called growth in NPLs “within expectations” after the slowdown in the economy.

Deposits during the nine months rose 10% year-on-year to P1.7 trillion, featuring 22% growth in low-cost deposits. CASA ratio (the proportion of current account to savings account deposits) improved to 71% from 64% a year earlier, it said.

The net interest margin rose by 30 basis points to 4.1% due to “healthy deposit growth” alongside the 175 basis-point reduction in policy rates in the nine months to September.

It said net loans and receivables contracted 13% year-on-year to P1.2 trillion. Commercial lending slowed “as clients deferred expansion plans and used excess liquidity to pay down debt obligations.”
Consumer loans also declined due to the economic uncertainty and a freeze on big-ticket spending in favor of essential goods.

Non-interest income rose 28%, driven by robust trading and foreign exchange gains of P17.8 billion. Meanwhile, service fees and commissions declined 10% due to lower transaction volumes and waived fees.

The bank said its cost-to-income ratio improved to 46% from 54% previously as operating expense growth slowed to 2% year-on-year to P43.9 billion, alongside efforts to enhance productivity, efficiency, and management of costs deemed non-essential.

The bank described its capital position as among the strongest in the industry, with the Capital Adequacy Ratio (CAR) at 19.9% and Common Equity Tier 1 (CET1) ratio at 19.0%.