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Investor confidence in Metrobank (MBT) building up?

The September 18, 2020 saw an above average trading volume of Metropolitan Bank & Trust Company/Metrobank (MBT) shares. MBT trades at a 65-day average volume of 3,365,912 but on September 18, 2020 trading, MBT’s volume was at 5,239,200.

A closer look on the September 18, 2020 trading day, would tell us that there could have been shake out from the impatient retail investors to the stronger foreign institutional investors. Leading the sell-off were two retail brokerage giants – COL Financial and First Metro Securities. While buyers were led by brokers identified with foreign institutional investors – ATR Kim Eng, CLSA, Macquarie, and UBS.

MBT bottomed at 32.90 a share on March 19, 2020. Since then, MBT was slow to recover. At 36.50, MBT is just 11% from the bottom. The presumed foreign buying in MBT on September 18, 2020 signals that foreign institutional investors confidence in MBT is building.

Metrobank beefing up reserves early, profit would have grew 61% pre-provision

Metropolitan Bank & Trust Company (Metrobank) generated P9.1 billion net income for the first half of the year 2020, a 30% decline from last year’s P13.0 billion. The decline was attributed to the early provisioning of loan-loss. Pre-provisions, MBT’s operating profit would have grew 61% as it earns a hefty one-time 13.1 Billion Pesos trading and forex gains.

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%.

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 Capital Adequacy Ratio of 19.98% and Common Equity Tier 1 (CET1) ratio of 18.66%, both well-above the regulatory requirements.

GT Capital Holdings, Inc. (GTCAP) controls MBT.

Disclaimer and Disclosure: This is an independent analysis for discussion purposes with the aim of giving stock traders and investors an independent view point.  Accuretti Systems Inc. in the course of day to day trading may have own, or is considering buying or disposing, the shares of the companies mentioned in this commentary.

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