Metrobank reported yesterday it earned P9.1 billion net income for the first half of the year, as the bank continued to fortify its provisions for potential risks to P22.8 billion. It said the decline from last year’s income is a result of proactive measures to secure the bank from further economic slowdown that may result from the continuing  COVID-19 pandemic.

 “Our core business remains strong. Pre-provision operating profit grew 61% and the 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 the challenges,” said Metrobank President Fabian S. Dee.

“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 non-performing loans (NPL) ratio was steady at 1.56%, the bank took the conservative route by increasing provisions to P22.8 billion, or 5x over the P4.6 billion booked in first half last year.  As a result, the NPL cover rose to 188%, 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), the bank’s net loans and receivables declined by 5% 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% contraction in auto loans.

Metrobank’s deposit base grew 5% to P1.7 trillion, largely driven by the 20% increment in low-cost deposits, improving the CASA ratio to 69% from 61% last year.  This, together with the 175-basis-point drop in policy rates, led to the marked reduction in the bank’s overall funding cost thus resulting in net interest margin improving by 41 basis points to 4.24%.

Meanwhile, non-interest income grew 55%, mainly due to the hefty P13.1 billion trading and FX gains.  This mitigated the weakness in service fees and commissions, which declined by 16%, a result of lower transaction volumes and waiver of some fees.  

Efforts to enhance productivity and efficiency resulted in muted operating cost growth of 7% to P29.6 billion, further improving the cost-to-income ratio to 45% from 56% 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 19.98% and Common Equity Tier 1 (CET1) ratio of 18.66%, both well-above the regulatory requirements.