Metrobank targets 20% income growth this year

Despite a contraction during the first quarter, Metropolitan Bank and Trust Co. still expects its net income to grow by 20 percent to P3 billion for the whole of 2003, banking on several key measures among them the sale of its bad assets.

In the first three months this year, the country’s biggest banking network reported net earnings of P465 million which was 22.7 percent lower than the P602-million profit made in the same period last year.

Last year, the bank posted a net income of P2.5 billion, a consistent growth from P2.1 billion and P1.5 billion in 2001 and 2000, respectively.

This year, however, bank officials remained cautiously optimistic as they pointed to several "external uncertainties" that could affect their full year performance.

Metrobank executive vice president Alfredo Javellana II stressed that while the growth of the bank would depend on the health of the Philippine economy, this could be offset by the negative effects on the economy of the US-Iraq war, the North Korean standoff, as well as the impact of the deadly severe acute respiratory syndrome (SARS).

Nonetheless, Javellana said the bank would aim to expand further its loan portfolio by another 10 percent and increase the volume and earnings from the deposits and earnings from overseas Filipino worker (OFW) remittances.

Another area where the bank hopes to increase its earnings is from the disposal of its bad assets, which have been estimated to reach over P16.3 billion.

At least P5-billion to P6- billion worth of non-performing assets (NPAs) are being eyed for disposal this year of which P1.5 billion would be from the bank’s direct efforts and the balance of about P4.5 billion likely to involve a special purpose asset vehicle (SPAV).

"We are studying the SPV Law and its implementing rules and regulations (IRR) for benefits coming from the incentive features or structures of the said law," Javellana said, adding that the P1.5-billion worth of NPAs are already clean for disposal.

Last year, Metrobank was able to dispose of some P880- million worth of foreclosed properties and other assets. At the start of this year, the bank’s non-performing loans (NPLs) stood at roughly 11 percent of its total loan portfolio. By the end of 2003, it hopes to further reduce the NPL ratio to 10 percent.

Provisioning for loan loss, meanwhile, stood at a little over 50 percent, targeting to raise this to over 60 percent by the end of 2003.

"We want to be aggressive in our provisioning, and we want to bring this further up to a 100-percent cover," Javellana said.