Metropolitan Bank & Trust Co. · PSE:MBT
Metropolitan Bank & Trust — 1H 2021 Earnings Presentation
48 slides from Metropolitan Bank & Trust's earnings presentation, August 2021
Slide 1: 1H 2021 Earnings Call
1H 2021 EARNINGS CALL
Slide 2: Panelists
Panelists TOTO TANSINGCO FABIAN S. DEE MYLENE 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 | August 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 n
Slide 5: Slower economic recovery seen even as vaccination improves
PRIVATE AND PROPRIETARY Slower economic recovery seen even as vaccination improves Setback from new highly transmissible variants and re-imposition of mobility restrictions, but vaccination continues to get underway Uncertainty remains, posing downside risk to GDP Potential re-opening dependent on v
Slide 6: Metro Manila on its way to achieving vaccination target
PRIVATE AND PROPRIETARY Metro Manila on its way to achieving vaccination target As of mid-July, over 3.9MM or 41% of the 9.6MM eligible population in Metro Manila has received at least one dose of the vaccine. Source: Rappler Research © Metropolitan Bank & Trust Company | Investor Relations | August
Slide 7: Expectations remain cautious
PRIVATE AND PROPRIETARY Expectations remain cautious Unemployment rate remains elevated Business confidence dips in 2Q21 Capacity utilization still low Next 3 months 17.6% Business Consumer 76.5 76.1 56.1 75.5 75.1 74.9 60.0 52.0 50.0 42.8 40.3 42.3 40.0 47.6 37.4 31.4 10.0% 70.1 30.0 69.6 8.7% 16.8
Slide 8: Accommodative monetary policy to support the economy
PRIVATE AND PROPRIETARY Accommodative monetary policy to support the economy Inflation rate starting to slow down Steepening yield curve 1H 2020 YE 2020 1Q 2021 1H 2021 4.0% 2.7% 5.00 Movement (in bps) 4.50 4.00 Nov-20 Dec-20 Jul-20 Apr-20 Oct-20 Apr-21 Jul-21 Jan-20 Jun-20 Jan-21 Jun-21 Aug-20 Sep-
Slide 9: GDP Forecasts
PRIVATE AND PROPRIETARY Metrobank Economic Research Forecasts As of August 2021 2019A 2020A 2021F 2022F GDP 6.0% -9.6% 4.8% 6.1% Inflation 2.5% 2.6% 4.1% 3.0% BSP RRP rate 4.0% 2.0% 2.0% 2.5% USDPHP Trend 50.6 48.0 50.6 51.7 DBCC* 6.0% - 7.0% 7.0% - 9.0% ADB 4.5% 5.5% GDP Forecasts DISCLAIMER INFORM
Slide 10: 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 CASA growth 20% 31% 40% 17% 19% 16% 14% 16% 35% 11% 30% 25% 34% 16% 18% 20% 12% 13% 15% 15
Slide 11: Financial Performance 1H 2021
PRIVATE AND PROPRIETARY FINANCIAL PERFORMANCE 1H 2021 © Metropolitan Bank & Trust Company | Investor Relations | August 2021 | MBT Company Presentation 11 This material was produced by Metrobank for information purposes only and is intended to be used in presentations by the Bank at investor meeting
Slide 12: Healthy asset quality drives lower provisions; boosts bottomline
PRIVATE AND PROPRIETARY Healthy asset quality drives lower provisions; boosts bottomline • Net income up 28% YoY • Weak loan demand and lower margins pare down NII, -16% YoY • Strong fee & trust income (+17%) tempers weakness in trading & FX gains (-69%) • Operating expenses flat YoY • Provisions fo
Slide 13: Net interest income weighed down by weak loan demand and NIM
PRIVATE AND PROPRIETARY Net interest income weighed down by weak loan demand and NIM Lower asset yields with plateauing impact from deposit costs soften the Bank’s overall net interest income Net interest income declines 16% in 1H21 NIM downtrend continues Pbn Interest Income Interest expense Pbn NI
Slide 14: Weak loan demand follows lukewarm economy
PRIVATE AND PROPRIETARY Weak loan demand follows lukewarm economy 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 Commercial Con
Slide 15: 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 loans remain weak Pbn SME Corporate Long Term (More than 1
Slide 16: Customers remain on the sidelines, funds kept in CASA
PRIVATE AND PROPRIETARY Customers remain on the sidelines, funds kept in CASA Parent Corporate and Commercial CASA to Loans ratio Parent CASA to Loans ratio, selected industries 100% 120% 109% Wholesale and 110% 90% 86% Commercial/SME 104% Retail Trade 84% CASA +11% YoY 99% CASA + 7% YoY 80% 78% 100
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 340 325 317 26% 28%
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 31% 29% 27% 25% 26% 1,797 1,817 +7%
Slide 19: Net interest margin declines on lower asset yields
PRIVATE AND PROPRIETARY Net interest margin declines on lower asset yields 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 Quarterly N
Slide 20: Easing loan yields from lower interest rates and paydowns
PRIVATE AND PROPRIETARY Easing loan yields from lower interest rates and paydowns 25.0% 20% 20% 19% Credit Cards 20.0% 19% Credit card rate cap took effect on Nov 2020; retained on April 2021 15.0% 13% 13% Auto 12% 10.2% 9.8% 9.2% 9.2% 10.0% 8.0% 8.4% 10.6% Home 7.4% 7.2% 7.8% 7.7% 5.0% 7.0% 7.1% 7.
Slide 21: Steady fee income, less opportunistic trading & FX gains
PRIVATE AND PROPRIETARY Steady fee income, less opportunistic trading & FX gains Stable fee income despite slow business volumes; strong trust fees; normalized trading income Non-Interest Income Breakdown Strong trust fees pulled up weak volume-based fees Pbn Others Leasing Pbn Fee income Trust inco
Slide 22: Stable cost growth
PRIVATE AND PROPRIETARY Stable cost growth Efforts to enhance productivity and operational efficiency being sustained; higher CIR driven by lower operating income Operating Expenses Breakdown Cost-To-Income Ratio Pbn Others Occupancy & equipment Depreciation Taxes & licenses Manpower 38.0 60.0% 57.2
Slide 23: Rising digital transactions
PRIVATE AND PROPRIETARY Rising digital transactions Active push for e-channels accelerated digital transactions under pandemic conditions 25% Digital users 2Q21 86% 14% among retail clients as of 1H 2021 vs 22% in 1H 2020 2020 85% 15% 2019 82% 18% Continued digitization seen % E-Channels to Total fi
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 maintain high reserves Conservative provisioning stance Maintaining ample NPL Cover Est. Credit Cost (bps) 600 504 500 382 400
Slide 25: Asset quality remains stable
PRIVATE AND PROPRIETARY Asset quality remains stable Easing NPL and Past Due ratios Restructured loans stay steady Past Due ratio NPL ratio Pbn Restructured Loans Ratio to Gross Loans 3.8% 3.4% 3.0% 3.0% 4.0% 2.4% 2.5% 0.5% 0.5% 8.0 3.0% 0.5% 0.4% 2.0% 2.3% 2.4% 2.4% 2.3% 1.0% 7.0 1.4% 1.6% 0.2% 5.5
Slide 26: Proactive asset quality management
PRIVATE AND PROPRIETARY Proactive asset quality management Commercial NPLs on the decline as consumer NPL formation was proactively managed Commercial NPL ratio eases Consumer NPL ratio remain stable Pbn NPLs NPL ratio Pbn NPLs NPL ratio 25 3.0% 23 1.8% 1.7% 2.0% 21 1.3% 1.4% 5.6% 1.1% 1.2% 25 5.0%
Slide 27: Consumer NPLs starting to wane
PRIVATE AND PROPRIETARY Consumer NPLs starting to wane Proactive NPL management pulled down retail NPLs Auto Home Credit Cards Pbn NPLs NPL ratio Pbn NPLs NPL ratio Pbn NPLs NPL ratio 20 5.0% 18 20 7.1% 16 3.8% 4.0% 20 6.5% 7% 18 6.6% 7.0% 3.4% 3.5% 3.2% 18 14 16 5.3% 5.1% 5% 3.5% 16 5.0% 12 3.0% 3.
Slide 28: Other asset quality indicators remain stable
PRIVATE AND PROPRIETARY Other asset quality indicators remain stable Foreclosed assets still steady. Lower NPLs support easing NPA ratio Real and other properties acquired (ROPA) Non-Performing Assets (NPA) Pbn Pbn ROPA Ratio to Gross Loans NPA NPA Ratio 0.8% 0.8% 15.0 0.8% 0.8% 0.9% 50.0 1.7% 1.9%
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 significantly above minimum thresholds Formidable Basel III Leverage
Slide 30: 2021 Outlook – Positives and Challenges Ahead
PRIVATE AND PROPRIETARY 2021 Outlook – Positives and Challenges Ahead • Recovery in fee income from higher transaction volumes • Challenging loan recovery in 2H21 with risks of heightened mobility restrictions, slower GDP rebound • Cost management to sustain low single-digit opex and ample client li
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 The pace of recovery remains challenging as the health crisis persists, but we remain optimistic as vaccination remains underway. We have managed to deliver strong earnings growth of 28% as weak loan demand and lower NIMs were outweighed by strong non-interest income,
Slide 33: Financial Summary
PRIVATE AND PROPRIETARY Financial Summary In PHP billion Balance Sheet 1H 2020 1H 2021 YoY Income Statement 1H 2020 1H 2021 YoY Total Assets 2,321 2,474 +7% Net Interest Income 44.5 37.5 -16% Loans and Receivables, Gross 1,364 1,207 -11% Total Deposits 1,701 1,817 +7% Non Interest Income 21.2 14.0 -
Slide 34: Additional Information
PRIVATE AND PROPRIETARY Additional Information © Metropolitan Bank & Trust Company | Investor Relations | August 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 d
Slide 35: Metropolitan Bank & Trust Company (Metrobank)
PRIVATE AND PROPRIETARY Metropolitan Bank & Trust Company (Metrobank) Overview Financial Data (PHP bn) 1H21 DIVERSIFIED Total Assets 2,474 50+ YEARS OF MULTI-AWARDED FINANCIAL CONGLOMERATE TRADING INFORMATION MBT PM | MBT.PS Ticker Loans and Receivables, Net Total Deposits 1,160 1,817 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: USD2.7 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 17,000+ employee base Domestic Branch and ATM Networks Overseas Network Coverage 950+ 30+ branches Branches, subsidiaries, offices 2,300+ ATMs 140+ Remittance tie-ups 150+ Remittance agents © Metropolitan Bank & Trust Company | Investo
Slide 38: 2020 Sustainability Measures
PRIVATE AND PROPRIETARY 2020 Sustainability Measures Reduce environmental 9% impact 13% 18% Php606.9Bn Estimated 14% Support Sustainability Contribution of social causes Commitment Outstanding Loans to UN SDGs 24% 20% Improve our governance standards Source: 2020 Sustainability Report © Metropolitan
Slide 39: Recent Awards and Recognition
PRIVATE AND PROPRIETARY Recent Awards and Recognition Best Local Currency Top Sellside - Corporate Most Recommended Best Bond Individuals 8th Best Workplace & Government Bonds; Corporate Retail Bank in the Securities House #1 in Trading, to Grow Your Career Investors' Choice for Governance Philippin
Slide 40: Debt Issuances
PRIVATE AND PROPRIETARY Debt Issuances Bond Issuance Unissued Php19.0 billion 19.0 5.25Y Peso Notes 2021 28.0 0.5 Listed June 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 2018 42.5 Ex
Slide 41: 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 May-21 Issue Coupon Maturity Amount Stable Type Date Rate Date (PHP Bn) • Very high likelihood of support from the 2021 28.00 Philippine government in times
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 90 84 70 50 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-
Slide 43: Loan Portfolio Breakdown
PRIVATE AND PROPRIETARY Loan Portfolio Breakdown 1H21 MBT Loan Portfolio By Industry 1H21 UKB Loan Portfolio By Industry 15% 14% 14% 13% 13% 12% 12% 12% 12% 12% 11% 11% 11% 11% 11% 13% 13% 13% 13% 12% 19% 19% 19% 19% 20% 17% 17% 17% 17% 17% Trade Manufacturing 9% 11% 11% 10% 10% 10% 10% 10% 10% 11%
Slide 44: Currency Breakdown
PRIVATE AND PROPRIETARY Currency Breakdown LOAN PORTFOLIO DEPOSITS Foreign Foreign Currency, Currency, 16% 18% Philippine Philippine Peso, 84% Peso, 82% © Metropolitan Bank & Trust Company | Investor Relations | August 2021 | MBT Company Presentation 44 This material was produced by Metrobank for in
Slide 45: 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 46: Special Dividend Declaration in 2021
PRIVATE AND PROPRIETARY Special Dividend Declaration in 2021 Ongoing pandemic has tempered near-term growth prospects Capital planning indicates muted demand for risk assets Key information Cash Php1.00 regular Strong NPL risk buffers already in place Dividends Php3.00 special per share Proactive pr
Slide 47: 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 48: 48 This material was produced by Metrobank for information purposes only and is intended
PRIVATE AND PROPRIETARY by © Metropolitan Bank & Trust Company | Investor Relations | August 2021 | MBT Company Presentation 48 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
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