Metropolitan Bank & Trust Company (Metrobank, PSE: MBT) posted a robust 21% net income growth in 2018, expanding to PhP22 billion from the PhP18.2 billion registered in 2017. Total resources likewise reached a new all-time high of PhP2.2 trillion.
Metrobank’s strong performance was driven by the healthy growth in loans complemented by margin expansion, higher service charges, fees and commissions, and manageable expense growth.
“2018 was a milestone year for our bank. Despite the challenging market conditions that especially characterized the second half of the year, we achieved consistent core income growth while keeping operating costs in check and asset quality intact,” Metrobank President Fabian S. Dee commented. “In addition, we have been steadily laying the groundwork for future expansion through structural changes, and focusing on productivity and efficiency improvements across the institution.”
The bank’s loan portfolio expanded by 10% year-on-year to PhP1.4 trillion. The commercial book led the growth at 11%, driven by the top corporate accounts, followed by the middle market and SME accounts.
Total deposits increased by 2% to PhP1.6 trillion at the end of 2018, while the Bank’s CASA ratio was maintained at 62%. Funding was supplemented by the issuance of PhP8.68 billion Long-Term Negotiable Certificates of Deposits (LTNCDs) in October, and PhP28 billion Fixed Rate Peso Bonds in November and December.
As a result, net interest income expanded by 12% to PhP68.8 billion, and accounting for 74% of the bank’s total revenues of PhP92.6 billion. Net interest margin expanded to 3.82%, still the highest among peer banks.
Meanwhile, total non-interest income grew to PhP23.8 billion. The major drivers are service fees and commissions and income from trust operations which combined went up by 13% to PhP14 billion. Fee-related revenues were boosted by steady customer-driven flows and trade-related commissions. In addition, net trading and FX gains contributed PhP2.8 billion while other income was at PhP6.2 billion.
Operating expenses, excluding taxes and licenses, increased at a slower pace of 10% to PhP44.9 billion. Manpower-related costs grew by 11% to PhP22.4 billion, while the balance was spent in support of the Bank’s continuous systems and process improvement efforts.
Asset quality metrics remained healthy and better than industry average. Non-performing loans (NPLs) ratio was recorded at 1.2%, while NPL cover increased to 105%. Overall credit cost was kept well-within the company’s guidance of 50 to 60 basis points for the full year. The Bank reported provisions for credit and impairment losses of PhP7.8 billion, which is already based on PFRS 9 adopted at the beginning of the year.
As of December 2018, Metrobank’s consolidated assets stood at PhP2.2 trillion and equity at PhP283 billion. The bank successfully completed its landmark PhP60.0 billion rights issue in April 2018. At year-end, capital ratios were comfortably above regulatory requirements, with total capital adequacy ratio at 17.0% and Common Equity Tier 1 ratio at 14.6%.