Retail field to boost Metrobank


(Source: Business World | 27 April 2016)

Metropolitan Bank & Trust Co. (Metrobank) sees opportunities in retail banking boosting growth prospects this year, buoyed by expectations of a continuous rise in consumer spending, which is also seen driving the Philippine economy for 2016.

The bank posted P18.6 billion in consolidated net earnings last year, down from the previous year’s P20.1 billion due to an industry-wide slump in trading gains, although its core income was up by 20%.

Metrobank Senior Vice-President and Head of Strategic Planning Jette C. Gamboa said earnings will be better this year with loans and deposit levels seen growing by double digits, premised on the bank’s forecast that Philippine gross domestic product (GDP) will grow 6.3% this year.

A modest 6% rise in GDP, she noted, normally translates to a “two to two-and-a-half percent” growth in loan portfolio.

“On the assumption that GDP growth will be at least 6%, that translates to a potential loan and deposit growth at mid-teens level. That’s at least 12-15%, and our growth areas will continue to be middle market, small and medium enterprises (SMEs) and the consumer sectors [which] are the segments that will continue to be the engines of growth of the industry,” Ms. Gamboa said in a media briefing before the bank’s annual stockholders meeting yesterday.

“As far as deposits are concerned, as we all know there is ample liquidity in the system, so I think deposit growth will remain healthy for this year.”

The bank’s total lending portfolio as of end-2015 stood at P887.2 billion, while total deposits with the bank grew 9% last year to P1.3 trillion.

Citing the challenges banks are facing from muted trading gains, corporates tapping capital markets to take advantage of low interest rates especially in fixed-income markets and the entry of more foreign banks in the country, the bank executive said lenders should “find new revenue streams”.

“One of the areas that we’re very optimistic about is retail. We’re very excited for the prospects in retail,” Ms. Gamboa said.

Currently, around 26% of the bank’s total loan book is retail, particularly auto and mortgage.

Metrobank’s focus will “revolve around the customers” increasing costumer touch points through electronic channels — mobile and internet banking — and also expanding its footprint nationwide.

For 2016, the country’s second largest bank in asset terms is looking to put up around “20 to 30 branches”. Its network is 945 branches and 2,200 automated teller machines.

Meanwhile, its ample capital following its P32-billion stock rights offer in April 2015 gives the bank enough legroom to capitalize on the growth prospects of the economy.

Its capital adequacy ratio — a measure of a lender’s financial strength — stood at 17.75%, well above the central bank’s 10% minimum requirement. Its common equity Tier 1 (CET1) ratio of 14.25% also exceeded the minimum CET1 ratio of 8.5%.

On its economic growth projection for the country, Ildemarc C. Bautista, Metrobank assistant vice-president and research head said the 6.3% outlook of the bank will continue to be driven by consumption spending — boosted by remittances and a strong business process outsourcing sector — and an expected pickup in government spending.

“Consumption spending will remain solid amid the still soft commodity prices and low interest rates. Election spending is expected to support key services such as transportation, communication and storage, business activities and retail trade.”

A slight pickup in manufacturing is also seen as exports of electronics slightly improve. The agriculture sector will remain weak as El Niño extends to the first half of the year.

Risks to the domestic economy are also seen persisting amid the effects of the still uneven global economic growth and impact of financial market volatilities, the official said.

Despite these headwinds, Mr. Bautista said the Philippine economy, along with most emerging markets in the Association of Southeast Asian Nations, is “doing relatively well” compared to developed economies.

“In general, although we’re relatively small, we’re doing quite well versus our peers and the rest of the world … our economy would have been growing around 7% except that imports drag. The Philippines has always been a net importer,”he added.

Shares in Metrobank closed at P82.35 each yesterday, down by 0.78% from the previous day’s close of P83 apiece.

— By Imee Charlee C. Delavin


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