May 14, 2014

MBT nets P5.7b in 1Q14

In a disclosure to the Exchange, Metrobank (MBT, Buy) said it posted net income of P5.7b in 1Q14. The bank saw its profit halved in 1Q14 vs. the same period last year in the absence of huge trading gains hat bloated last year’s income.

Nonetheless, the bank was able to grow its core earnings, with P11.1b coming from net interest income (+26%) and P9b coming from non-interest income (-53%). Opex growth grew by just 4.6% to P10.8b while provisions for losses of P1.2b were relatively flat vs. last year. Its loan book expanded 19% to P624b, while total deposits grew 50% and exceeded the P1.0t mark. Its consolidated assets also reached P1.4t. Moreover, MBT’s net interest margin remained steady at 3.9%.

Our take: Notwithstanding the earnings decline from last year’s high base, we view the bank’s 1Q14 results positively. So far, the bank has been able to deliver a healthy growth in core earnings, driven by consistent asset growth and relatively high but stable margins.

Moreover, gains from property and asset sales of about P4b have helped cushion the absence of huge trading gains this year. Note that MBT’s 1Q14 earnings already represent34% of the P16.6b 2014 consensus estimate. Considering this, MBT is on-track to exceed the 2014 consensus estimate.

Barring significant losses from its trading operations or is not hit by any major credit loss, we expect that MBT to show notable core earnings growth this year. Further, we foresee that MBT’s net interest income may show some acceleration in subsequent quarters on higher interest earnings from the bigger asset and loan bases. – WealthSec