Metropolitan Bank & Trust Co. · PSE:MBT
Metropolitan Bank & Trust — Q1 2021 Earnings Presentation
45 slides from Metropolitan Bank & Trust's earnings presentation, May 2021
Slide 1: 1Q 2021 Earnings Call
1Q 2021 EARNINGS CALL
Slide 2: Panelists
Panelists TOTO TANSINGCO FABIAN S. DEE MAYET CAPARAS Treasurer & President Head, Institutional Banking Head, Financial Markets
Slide 3: Panelists
Panelists MONJ DEL ROSARIO RENE DE BORJA, JR. MINDA OLONAN Head, Consumer Business Controller Head, Investor Relations
Slide 4: Macroeconomic View
PRIVATE AND PROPRIETARY MACROECONOMIC VIEW © Metropolitan Bank & Trust Company | Investor Relations | May 2021 | MBT Company Presentation 4 This material was produced by Metrobank for information purposes only and is intended to be used in presentations by the Bank at investor meetings and does not
Slide 5: GDP on an uptrend, but at a slower pace
PRIVATE AND PROPRIETARY GDP on an uptrend, but at a slower pace Re-imposition of heavy quarantine measures pose downside Trade activities have bottomed out from 2Q 2020 risk to GDP 6.3 6.1 5.9 5.6 6.3 6.6 USDbn % YoY 4.5 Imports 20% 8% 3% 10% -2% -5% 55 -4% -8% -12% -16% 0% -0.7 -10% 45 -4.2 -20% 35
Slide 6: High unemployment, low industry utilization, tepid confidence
PRIVATE AND PROPRIETARY High unemployment, low industry utilization, tepid confidence Unemployment rate remains elevated Capacity utilization (%) Consumer confidence still low Next 3 months 17.6% 76.5 76.1 Business Consumer 75.5 75.1 74.9 60.0 56.1 52.0 50.0 42.8 40.3 42.3 70.1 40.0 37.4 10.0% 67.9
Slide 7: Accommodative monetary policy to support the economy
PRIVATE AND PROPRIETARY Accommodative monetary policy to support the economy Inflation on the uptrend …met by steepening yield curve 4.5% 1Q20 YE 2020 1Q21 2.2% 5.07 5.15 4.77 4.85 4.63 5.06 4.45 Nov-20 Dec-20 Apr-20 Oct-20 Jul-20 Apr-21 Jan-20 Jun-20 Jan-21 Aug-20 Sep-20 Feb-20 Mar-20 Feb-21 Mar-21
Slide 8: GDP Forecasts
PRIVATE AND PROPRIETARY Metrobank Economic Research Forecasts As of May 2021 2019A 2020A 2021F GDP 6.0% -9.6% 4.5% Inflation 2.5% 2.6% 4.1% BSP RRP rate 4.0% 2.0% 2.0% USDPHP Trend 50.6 48.0 49.3 DBCC* 6.0% - 7.0% ADB 4.5% GDP Forecasts DISCLAIMER INFORMATION The report above is circulated for gener
Slide 9: Banking Industry: Loan slowdown amid ample liquidity
PRIVATE AND PROPRIETARY Banking Industry: Loan slowdown amid ample liquidity Soft loan demand amid rising asset quality pressures Deposit growth sustained amid ample market liquidity Loan growth Deposit growth 20% 19% 34% 16% 17% 16% 14% 11% -0.7% 12% 14% 12% 8% 9% 9% 10% 8% -5% 2013 2014 2015 2016
Slide 10: Financial Performance
PRIVATE AND PROPRIETARY FINANCIAL PERFORMANCE 1Q 2021 © Metropolitan Bank & Trust Company | Investor Relations | May 2021 | MBT Company Presentation 10 This material was produced by Metrobank for information purposes only and is intended to be used in presentations by the Bank at investor meetings a
Slide 11: Strong non-interest income, lower provisions, flat opex drive 1Q earnings
PRIVATE AND PROPRIETARY Strong non-interest income, lower provisions, flat opex drive 1Q earnings Soft core lending amid lower asset repricing tempers revenues, offset by less provisioning expense as asset quality remains manageable Mixed revenue performance; Stable asset quality • Weak loans and lo
Slide 12: Net interest income weighed down by loan and yield contraction
PRIVATE AND PROPRIETARY Net interest income weighed down by loan and yield contraction While funding cost continues to improve on solid CASA deposit generation, lower asset repricing soften the Bank’s overall net interest income Assets reprice under a low interest rate environment NIM downtrend cont
Slide 13: Weak loan demand aligned with economic uncertainty
PRIVATE AND PROPRIETARY Weak loan demand aligned with economic uncertainty Contraction in loan portfolio reflective of the slowdown across industries while freed-up client liquidity remains parked in CASA deposits Contraction in gross loan portfolio continues Client funds drive CASA growth Pbn Comme
Slide 14: Commercial lending continues to reflect weak economic activity
PRIVATE AND PROPRIETARY Commercial lending continues to reflect weak economic activity Slowdown in commercial loans as economic uncertainty disrupted business inventory cycle and deferred expansion plans Commercial Loans Breakdown Short term working capital loans drove the slowdown Pbn SME Corporate
Slide 15: Higher concentration in Trade and Manufacturing
PRIVATE AND PROPRIETARY Higher concentration in Trade and Manufacturing 1Q21 MBT Loan Portfolio By Industry 1Q21 UKB Loan Portfolio By Industry 15% 15% 14% 14% 13% 13% 13% 13% 12% 12% 13% 11% 12% 12% 11% 11% 13% 13% 13% 13% 17% 19% 19% 20% 20% 20% 17% 17% 17% 17% Trade Manufacturing 10% 10% 10% 11%
Slide 16: Customer CASA surges, implying wait-and-see mode
PRIVATE AND PROPRIETARY Customer CASA surges, implying wait-and-see mode Parent Corporate and Commercial CASA to Loans ratio Parent CASA to Loans ratio, selected industries 100% 120% 110% Wholesale and 90% 104% 84% Commercial/SME 101% Retail Trade 81% CASA +17% YoY 100% CASA + 14% YoY 80% 90% 70% 80
Slide 17: Retail portfolio slows amid weak consumption spending
PRIVATE AND PROPRIETARY Retail portfolio slows amid weak consumption spending Economic uncertainty, high unemployment, and reduced mobility continue to constrain demand for big-ticket spending Consumer Loans Breakdown Consumer Loans By Product Pbn Others Auto Housing Credit Card 350 340 325 317 26%
Slide 18: Strong CASA growth reflects strong deposit franchise
PRIVATE AND PROPRIETARY Strong CASA growth reflects strong deposit franchise Clients with lower borrowing demand maintained their excess funds in CASA deposits, driving CASA ratio higher Robust CASA enables decline in expensive TDs CASA Ratio Pbn CASA TDs CASA TDs 34% 31% 29% 27% 25% 1,797 1,738 +1%
Slide 19: Net interest margin declines on lower asset repricing
PRIVATE AND PROPRIETARY Net interest margin declines on lower asset repricing Continued low interest rates and short securities duration trim down asset yields, outpacing the reduction in funding cost Easing asset yield trims down NIM* Declining asset yields, funding cost decline tapers off NIM Poli
Slide 20: Easing loan yields from lower interest rates and paydowns
PRIVATE AND PROPRIETARY Easing loan yields from lower interest rates and paydowns 20% 20.0% 19% 18% 18% Credit Cards 15.0% Credit card rate cap took 13% effect on Nov 2020; 12% retained on April 2021 Auto 10.2% 9.8% 10.0% 9.2% 9.2% 9.1% 10.6% Home 7.4% 7.8% 7.7% 7.2% 7.0% 7.1% Paydowns usually occur
Slide 21: Steady fee income, opportunistic trading & FX gains
PRIVATE AND PROPRIETARY Steady fee income, opportunistic trading & FX gains Stable fee income despite slow business volumes; strong trust fees; Trading & FX gains realized prior to higher bond yields Non-Interest Income Breakdown Strong trust fees pulled up weak volume-based fees Pbn Others Leasing
Slide 22: Stable cost growth
PRIVATE AND PROPRIETARY Stable cost growth Minimal uptick in expenses from sustained efforts to enhance productivity and operational efficiency Operating Expenses Breakdown Cost-To-Income Ratio Pbn Others Occupancy & equipment Depreciation Taxes & licenses 20.0 Manpower 18.0 16.2 54.6% 54.6% 15.1 +1
Slide 23: Rising digital transactions
PRIVATE AND PROPRIETARY Rising digital transactions Active push for e-channels accelerated digital transactions under pandemic conditions 15% Digital users among 15% 24% 17% retail clients as of 1Q 2021 From 20% in 1Q 2020 83% 85% 85% 1Q 2020 FY 2020 1Q 2021 Continued digitization post-ECQ % E-Chann
Slide 24: Stable NPLs and ample reserves give room to lower provisions
PRIVATE AND PROPRIETARY Stable NPLs and ample reserves give room to lower provisions Mindful of potential risks ahead despite manageable asset quality, the Bank continued to boost its reserves, albeit at a slower pace than last year Conservative provisioning stance Raising NPL cover to a high 166% E
Slide 25: Asset quality remains stable
PRIVATE AND PROPRIETARY Asset quality remains stable NPL and Past Due Restructured Loans Past Due ratio NPL ratio Pbn Restructured Loans Ratio to Gross Loans 3.7% 3.4% 3.0% 4.0% 2.4% 2.5% 3.0% 1.9% 8.0 2.0% 0.5% 0.5% 2.3% 2.4% 2.4% 7.0 0.4% 1.0% 1.3% 1.4% 1.6% 0.0% 6.0 0.2% 0.3% Past Due NPL 0.2% 0.
Slide 26: Proactive asset quality management
PRIVATE AND PROPRIETARY Proactive asset quality management Commercial NPLs inching up as ongoing pandemic limits business opportunities, while consumer NPL formation was proactively managed Commercial NPL ratio Consumer NPL ratio Pbn NPLs NPL ratio Pbn NPLs NPL ratio 25 3.0% 23 1.9% 2.0% 21 1.3% 1.4
Slide 27: Easing consumer NPLs
PRIVATE AND PROPRIETARY Easing consumer NPLs As consumer NPLs tend to show up faster than commercial, proactive NPL management pulled down bad retail loans Auto Home Credit Cards Pbn NPLs NPL ratio Pbn NPLs NPL ratio Pbn NPLs NPL ratio 20 5.0% 18 20 7.0% 16 4.0% 20 6.5% 7% 18 6.6% 7.0% 3.4% 3.5% 3.2
Slide 28: Other asset quality indicators remain stable
PRIVATE AND PROPRIETARY Other asset quality indicators remain stable Real and other properties acquired (ROPA) Non-Performing Assets (NPA) Pbn Pbn ROPA Ratio to Gross Loans NPA NPA Ratio 0.8% 0.8% 0.8% 15.0 0.9% 1.7% 50.0 1.9% 0.8% 1.6% 1.6% 13.0 0.7% 0.7% 0.8% 45.0 1.7% 0.7% 1.3% 1.4% 1.5% 11.0 0.6
Slide 29: Strong balance sheet, healthy capital levels provide ample support
PRIVATE AND PROPRIETARY Strong balance sheet, healthy capital levels provide ample support The Bank is highly liquid and well-capitalized, with capital and liquidity ratios comfortably above the regulatory threshold Capital Ratios Basel III Leverage Ratio, Liquidity Coverage Ratio CAR CET-1 BLR LCR
Slide 30: 2021 Outlook – Positives and Challenges Ahead
PRIVATE AND PROPRIETARY 2021 Outlook – Positives and Challenges Ahead • Modest loan recovery in 2H21, in line with the expected • Margin pressure as full impact of interest rate cuts (i.e. GDP rebound interest rate cap on credit cards; full-year policy rate cut transmission) take effect • Recovery i
Slide 31: Key strategies to enhance returns
PRIVATE AND PROPRIETARY Key strategies to enhance returns Topline Growth Drivers Improving Efficiency • Maintain stronghold in commercial banking ✓ Target cost-income ratio to low-50s ✓ Capitalize on MBT’s capacity to extend credit, based on client cash flows and investment needs ✓ Migration to e-ch
Slide 32: Summary
PRIVATE AND PROPRIETARY SUMMARY Operating environment remains challenging as the health crisis persists. We have managed to deliver robust earnings growth of 27% as the impact of weak loan demand and lower NIMs were outweighed by strong non-interest income growth, subdued opex growth and lower provi
Slide 33: Financial Summary
PRIVATE AND PROPRIETARY Financial Summary In PHP billion Balance Sheet 1Q 2020 1Q 2021 YoY Income Statement 1Q 2020 1Q 2021 YoY Total Assets 2,377 2,372 +0% Net Interest Income 21.4 19.0 -11% Loans and Receivables, Gross 1,450 1,203 -17% Total Deposits 1,714 1,738 +1% Non Interest Income 6.2 7.9 +28
Slide 34: Additional Information
PRIVATE AND PROPRIETARY Additional Information © Metropolitan Bank & Trust Company | Investor Relations | May 2021 | MBT Company Presentation 34 This material was produced by Metrobank for information purposes only and is intended to be used in presentations by the Bank at investor meetings and does
Slide 35: Metropolitan Bank & Trust Company (Metrobank)
PRIVATE AND PROPRIETARY Metropolitan Bank & Trust Company (Metrobank) Overview Financial Data (PHP bn) 1Q21 DIVERSIFIED Total Assets 2,372 50+ YEARS OF MULTI-AWARDED FINANCIAL CONGLOMERATE TRADING INFORMATION Loans and Receivables, Net Total Deposits 1,158 1,738 MBT PM | MBT.PS Ticker SERVICE EXCELL
Slide 36: Ownership and Investment Information
PRIVATE AND PROPRIETARY Ownership and Investment Information CORPORATE STRUCTURE MARKET DATA Trading information Ticker: GTCAP PM / GTCAP.PS Market cap: USD2.4 Bn Ty Family Ticker (Bloomberg | Reuters) MBT PM | MBT.PS & Other Free Related float Par value (PHP) 20.00 Parties Outstanding shares 4,497,
Slide 37: Extensive Domestic and Overseas Coverage
PRIVATE AND PROPRIETARY Extensive Domestic and Overseas Coverage Domestic Branch and ATM Networks Overseas Network Coverage 950+ branches 30+ Branches, subsidiaries, 2,300+ offices ATMs 140+ Remittance tie-ups 140+ Remittance agents © Metropolitan Bank & Trust Company | Investor Relations | May 2021
Slide 38: Outstanding Debt Issuances & Investment Grade Credit Ratings
PRIVATE AND PROPRIETARY Outstanding Debt Issuances & Investment Grade Credit Ratings Debt Issuance Details Debt Maturity Profile (PHP Bn) Baa2 Dec-20 Issue Coupon Maturity Amount Stable Type 2021 2022 2023 2024 2025 2026 Date Rate Date (PHP Bn) • Very high likelihood of support from the Nov-14 4.250
Slide 39: COVID-19 Initiatives
PRIVATE AND PROPRIETARY COVID-19 Initiatives For Employees For Clients For Communities Flexible work arrangements Waived Interbank Fund Transfer Fees Shifting schedules, remote work, redeployment to nearer worksite Until 30 June 2021 Through InstaPay and PESONet Additional allowances and benefits Pr
Slide 40: 2020 Sustainability Measures
PRIVATE AND PROPRIETARY 2020 Sustainability Measures Reduce environmental 9% impact 13% 18% Php606.9Bn Estimated 14% Support social Sustainability Contribution of causes Commitment Outstanding Loans to UN SDGs 24% 20% Improve our governance standards Source: 2020 Sustainability Report © Metropolitan
Slide 41: Debt Issuances
PRIVATE AND PROPRIETARY Debt Issuances Bond offer Unissued Php19.0 billion 19.0 5.25Y Peso Notes 2021 28.0 0.5 Offer period: May 6 – 18, 2021 USD2 Billion 1.9x oversubscribed Php100 2020 Billion Bond 10.5 Medium-Term 3.60% interest rate, 35bps above Note benchmark rate Programme 2019 Programme 1.5 2
Slide 42: MBT 5.5Y MTN Bond Spread Over 5Y US Treasuries
PRIVATE AND PROPRIETARY MBT 5.5Y MTN Bond Spread Over 5Y US Treasuries Tighter spread may be due to a better outlook for the country and good investor confidence on the issuance Credit Spread (in bps) 230 Maximum 207 210 190 170 150 130 110 Current 85 90 70 50 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-
Slide 43: Recent Awards and Recognition
PRIVATE AND PROPRIETARY Recent Awards and Recognition Best Local Currency Top Sellside - Corporate Most Recommended Best Top Investment House in Bond Individuals & Government Bonds; Corporate Asian G3 Bonds; 4th in Retail Bank in the Securities House #1 in Trading, Investors' Choice for Asian Local
Slide 44: For more information, please visit our website
PRIVATE AND PROPRIETARY For more information, please visit our website: Latest Annual Reports 2020 2019 2018 Financial Reports SEC 17-A SEC 17-Q BSP SOC Investor Relations https://metrobank.com.ph/about-us/investor-relations-program Annual Corporate Governance Report For your comments and queries co
Slide 45: 45 This material was produced by Metrobank for information purposes only and is intended
PRIVATE AND PROPRIETARY by © Metropolitan Bank & Trust Company | Investor Relations | May 2021 | MBT Company Presentation 45 This material was produced by Metrobank for information purposes only and is intended to be used in presentations by the Bank at investor meetings and does not constitute a re
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