Metropolitan Bank & Trust Company (Metrobank) said it increased its loan provisions to P22.8 billion as proactive measures to secure the bank from further economic slowdown that may result from the continuing COVID-19 pandemic.
As a result, Metrobank generated P9.1 billion net income for the first six months of the year, 30 percent lower from the P13 billion posted during the same period last year.
Fabian Dee, Metrobank President, however stressed their core business remains strong with pre-provision operating profit growing by 61 percent.
“(Our) balance sheet is solid, with good deposit levels. We have faced crisis events in the past, and while the current pandemic is unprecedented, our substantial capital position combined with prudent strategic actions will enable us to weather forthcoming challenges,” Dee said.
“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. We are taking all the necessary steps as we continue to focus on supporting our clients and the recovery of the overall economy,” he added.
Even as the bank’s non-performing loans (NPL) ratio was steady at 1.56 percent, the Dee said they took the conservative route by increasing provisions to P22.8 billion, or 5x over the P4.6 billion booked in first half last year.
This increased the bank’s NPL cover to 188 percent, which “underscores the strategy of beefing up reserves early in anticipation of future risks.”
With the slowdown across industries as activities ground to a halt during the quarantine in the second quarter, Dee said the bank’s net loans and receivables declined by 5 percent to P1.3 trillion.
“Lending for the commercial segment was tempered as expansion plans were put on hold due to the uncertain business climate. Consumer loans were little changed as steady mortgage and increased credit card receivables offset the 6 percent contraction in auto loans,” Dee said.
Metrobank’s deposit base grew 5 percent to P1.7 trillion, largely driven by the 20 percent increment in low-cost deposits, improving the CASA ratio to 69 percent from 61 percent last year.
Together with the 175-basis-point drop in policy rates, this led to the marked reduction in the bank’s overall funding cost, resulting in net interest margin improving by 41 basis points to 4.24 percent.
Non-interest income grew 55 percent due to the P13.1 billion trading and FX gains.
This mitigated the weakness in service fees and commissions, which declined by 16 percent, a result of lower transaction volumes and waiver of some fees.
Efforts to enhance productivity and efficiency resulted in operating cost growth of 7 percent to P29.6 billion, further improving the cost-to-income ratio to 45 percent from 56 percent previously.
Metrobank remains one of the largest banks in the country with P2.3 trillion consolidated assets.
Total equity amounted to P323 billion at the end of June, sustaining strong capital ratios with Total CAR of 19.98 percent and Common Equity Tier 1 (CET1) ratio of 18.66 percent, both well-above the regulatory requirements.
The bank has one of the largest domestic networks with over 960 branches and over 2,300 automated teller machines (ATMs) nationwide, and over 30 foreign branches, subsidiaries and representative offices.
