Metrobank's H1 Profit Inches Up to P24.9 Billion Amid Higher Interest Income

MANILA, Philippines — Metropolitan Bank and Trust Co. (Metrobank) saw its earnings remain broadly steady in the first half as stronger interest income was partly offset by weaker trading gains and higher provisions for potential credit losses. In its quarterly report, the Ty-led bank said net income reached P24.9 billion from P24.85 billion in the same period last year. For the second quarter alone, Metrobank’s net income slipped by 2.3 percent to P12.3 billion from P12.59 billion a year earlier, as higher net interest income was outweighed by weaker non-interest revenues, rising expenses and higher credit provisions. “The operating environment remained challenging in the first half, requiring us to stay disciplined and focused,” Metrobank president Fabian Dee said. “Our results reflect the strength of Metrobank’s core businesses, the continued trust of our clients and our prudent approach to balancing growth and risk. We will continue to support our clients while pursuing sustainable growth in an uncertain environment,” Dee said. The bank’s core lending business remained the main earnings driver during the six-month percent, with net interest income climbing by 12.8 percent to P67.74 billion from P60.04 billion. Interest income increased by 8.6 percent to P97.9 billion, supported by higher earnings from investment securities and loans. Interest expenses, meanwhile, were nearly unchanged at P30.16 billion from P30.08 billion as higher deposit costs were offset by lower borrowing costs. Metrobank’s net interest margin was broadly stable at 3.74 percent from 3.73 percent a year ago. However, other operating income dropped by 21 percent to P13.9 billion from P17.59 billion, largely due to a P4.08-billion decline in net trading, securities and foreign exchange gains. The decline was partly cushioned by a P770-million increase in fee-based income. Service charges, fees and commissions increased by nine percent to P9.35 billion in the first half from P8.58 billion a year earlier. Operating expenses increased by 10.1 percent to P42.44 billion from P38.55 billion, driven by higher manpower costs, occupancy and equipment-related expenses as well as taxes and licenses, information technology and advertising spending. This pushed Metrobank’s operating efficiency ratio to 52.37 percent from 50 percent a year ago as the increase in expenses outpaced growth in operating income. Metrobank also raised provisions for credit and impairment losses by 26.8 percent to P7.46 billion from P5.88 billion amid a weaker macroeconomic backdrop. The group’s non-performing loan ratio rose to 1.81 percent as of end-June from 1.54 percent a year earlier, although the bank said its asset quality remained stronger than the industry’s 3.4-percent ratio. NPL coverage stood at 133.3 percent. Gross loans expanded by 12.4 percent year on year. Corporate and commercial loans increased by 12.8 percent, while consumer loans grew by 11.1 percent on higher credit card and mortgage lending. Total deposits rose by 10.4 percent year on year to P2.6 trillion, with low-cost current and savings accounts up by 6.4 percent. CASA deposits accounted for 60.5 percent of the total. The loan-to-deposit ratio rose to 81.11 percent from 79.64 percent a year earlier. Despite the slightly higher first-half income, Metrobank’s return on average equity eased to 11.98 percent from 12.8 percent, while return on average assets slipped to 1.28 percent from 1.42 percent. The bank attributed the lower ratios to increases in average equity and assets that outpaced earnings growth. Metrobank ended June with P3.92 trillion in consolidated assets. Information source: Philstar Business