After acquiring three banks (Solidbank, Philbank and AsianBank) the Metropolitan Bank and Trust Co. (Metrobank) has decided to increase its loan-loss reserve level to better prepare it for any negative turns in the economy.
Metrobank's allowance for probable losses amounted to P13.88 billion as of end-1999, 146 percent higher than the previous year's reserve of P5.65 billion.
"The current economic situation necessitated some drastic moves on our part to protect our stakeholders' interests against unexpected turns in the economy; at the same time, our acquisition of Solidbank, Philbank and AsianBank gave us the opportunity to set up what we consider as a more conservative level of provisions," Metrobank president Antonio S. Abacan Jr. noted.
"We would like to emphasize that, after a thorough review of our loan portfolio, we do not anticipate our bad loans to increase further. In addition, about 60 percent of our loan exposures are fully secured and collateralized," Abacan added as he emphasized that the move was in consideration of economic concerns and was done to protect the interests of its stockholders and clients and prepare the bank for better returns on equity (ROEs) in the future.
"Moreover we would like our stakeholders to realize that Metrobank is prepared for any eventuality in the economy so they will really feel that they are in good hands with the bank," he remarked.
Metrobank reported a net income of P3.13 billion -- after providing P1.802 billion in loan-loss reserves charged to operations and P2.929 billion (net of deferred income tax) deducted from surplus -- and capital funds of P45.01 billion as of Dec. 31, 1999.