Metrobank sees strong loan demand boosting income

Metropolitan Bank & Trust Co. (Metrobank) expects loan demand this year to be boosted by stronger economic growth and rate cuts from the Bangko Sentral ng Pilipinas (BSP), which could propel its net earnings.

“We expect faster GDP (gross domestic product) growth coupled with the prospect of rate cuts [this] year with easing inflation, leading to more optimistic business and consumer sentiment, hence stimulating loan demand,” Metrobank said in an e-mail.

The bank expects to sustain its net income growth this year on the back of a strong capital base and loan growth.

“Metrobank is well positioned to take on opportunities to finance the requirements of a growing economy given our strong capital and healthy loan portfolio,” it said.

The government targets GDP growth of 6.5-7.5% this year, slightly faster than the 6-7% goal for 2023.

The Philippine economy expanded by 5.9% in the third quarter of 2023, bringing the nine-month average to 5.5%.

Meanwhile, the BSP may cut borrowing costs by as much as 100 basis points (bps) this year as inflation is seen to stay mostly within the 2-4% target band, the Finance chief said on Monday.

Finance Secretary and Monetary Board member Benjamin E. Diokno said the BSP could mirror the expected 75-100 bps in cuts from the US Federal Reserve later this year.

The BSP kept the benchmark rate steady at a 16-year high of 6.5% at its December meeting. This was after the Monetary Board tightened rates by 450 bps from May 2022 to October 2023 to tame inflation.

Inflation averaged 6% in 2023, higher than 5.8% in 2022. It marked the second straight year that average inflation breached the BSP’s 2-4% target.

In 2023, Metrobank’s loan growth was driven by a strong capital base, low nonperforming loans (NPLs), and high provisions, it said.

As of end-September 2023, Metrobank’s loan portfolio grew by 7% year on year.  

Meanwhile, the bank’s NPL ratio stood at 1.7% at end-September, improving from 1.9% in the same period in 2022.

“This is in contrast to the mild uptick in industry NPL ratio to 3.5% as of September from 3.2% end-2022. Our prudent risk management has kept our restructured loans stable at just 0.4% of loans, among the lowest in the industry,” Metrobank said.

The lender saw a “strong” performance throughout 2023, with a 36% growth in attributable net income for the first nine months to PHP 31.8 billion amid an expanding asset base, higher margins, healthy net interest income growth and better asset quality, it said.

Metrobank saw its net income rise by 38.7% to PHP 10.89 billion in the third quarter of 2023 as the growth in its revenues outpaced its expenses.

For the first nine months, its attributable net income stood at PHP 31.8 billion, a 35.6% increase from PHP 23.4 billion a year earlier.

The bank’s shares rose by 50 centavos or 0.9% to end at PHP 56 apiece on Thursday. — A.M.C. Sy