Makati—(PHStocks)—Metropolitan Bank & Trust Company (Metrobank, PSE: MBT) was upgraded to investment grade status by Moody’s Investors Service (Moody’s). The Bank’s baseline credit assessment (BCA) and Bank Financial Strength Rating (BFSR) were upgraded to Baa3 from its previous Ba1 rating. The credit rating upgrade is viewed as an affirmation and recognition that Metrobank has taken the right strategic path to sustainable growth.
Metrobank is just one of two Philippine banks given the investment grade rating by Moody’s on its BCA and BFSR. This is the first investment grade rating bestowed on Metrobank by one of the three main international credit rating agencies.
This upgrade sets Metrobank at par with the Republic of the Philippines, which recently received the same rating upgrade. It demonstrates the strength of the Metrobank franchise in the country and reflects its strong correlation to domestic economy.
Moody’s cited Metrobank’s track record of profitability and dominant presence in the domestic corporate and consumer segments. It also took into account the consistently robust capital and liquidity profiles which are reflective of the Bank’s discipline and prudent and strategic approach to growth. Moody’s further cited that the Bank’s credit metrics are comparable with other Baa3 banks in the region.
The results of Metrobank’s strategic approach to growth are evident in the Bank’s steady increase in profitability and continuous improvement in asset quality.
Metrobank has delivered a compounded annual growth rate in net income of 37% over the past five years, hitting a high of PhP18.1 billion in the first semester of 2013. More importantly, the steady increase in profitability did not come at the expense of asset quality. In the same period, the non-performing loan (NPL) ratio has consistently improved from 3.5% in 2009 to 1.8% as of June 2013, which ranks below the industry average of 2.7%.
While the Bank has maintained majority of its loan book in corporate accounts, in recent quarters, its consumer segment as delivered above industry loan growth to help fuel the consumption demand in the Philippine economy. At the end of he first semester of 2013, Metrobank reported the second largest consumer loan portfolio among its peers.
Total capital adequacy ratio (CAR) in the first semester of 2013 remained above the 10% regulatory limit with an 18.1% total CAR and 15.7% Tier 1 CAR. At these levels, the Bank believes it is prepared to meet the new Basel III standards which take effect in January 2014.
Metrobank ended the first semester with PhP1.2 trillion in consolidated assets and PhP135.6 billion in equity. Metrobank maintains the largest consolidated branch network among Philippine banks with 832 domestic branches supplemented by 1,822 ATMs nationwide as of June 2013.
Metrobank also received a Baa3 (Positive outlook) on its deposit ratings from a previous Ba1 rating. The positive outlook reflects the ratings agency’s expectation that a potential upgrade may happen in the near future, unlike in the case of a stable outlook where ratings are expected to remain unchanged.
As a result of the upgrade in BCA, the following ratings of Metrobank were also upgraded: local currency subordinated debt rating upgraded to Ba1 from Ba2; foreign currency subordinated debt rating upgraded to Ba2 (hyb) from Ba3 (hyb); ank Financial Strength Rating (BFSR) of D+, which maps to a Baa3 BCA.