Metrobank targets recovery this year

MANILA, Philippines- George S. K. Ty-led Metropolitan Bank & Trust Co. aims to regain from last year's lower net income even with a slowdown in lending, head of treasury group Fernand Antonio A. Tansingco said. As the bank saw a 37.36 percent decline in net income attributable to shareholders to P4.41 billion in 2008 from P7.04 billion the previous year, he said Metrobank is going to "come in aligned" with most market analysts' estimates of between P4 billion and P5.3 billion for 2009. However, he declined to give what growth the bank is looking at for this year. "We are looking more of recovery (this year). We are looking at better margins on our loan portfolio; there are no more write offs on our financial assets as we have fully written them down. The thing you have seen from last year is what you call statistical anomaly. You see risk models failing. We have to rely on good common sense banking. Stay away from things we don't know and go back to what we do know. We have reconfigured our investment books back to RoPs (sovereign bonds), US treasury. We don't have any credit-linked notes outside RoPs," he told reporters after the annual stockholders meeting. In 2008, Metrobank marked down its risky assets in its portfolio even if regulators allowed accounting relief via reclassification of investment securities. It has a direct exposure to debt-saddled Lehman Brothers Holdings Inc. (Lehman) bonds amounting to $20.4 million and has made provisions equivalent to $14 million using current market prices. It also has a loan exposure to a Lehman subsidiary based in the Philippines amounting to P2.4 billion. During the stockholders meeting, Metrobank President Arthur Ty said the bank is entering 2009 with a "cleaner slate barring any extraordinary conditions." With the economic slowdown, the bank expects margin pressure to continue as its loan growth weakens between five percent and eight percent from 17 percent last year. "The global crisis is not yet over. We don't know what is going to happen. This is not the time to take in more risk. We will have a tempered approach to credit," said Jette C. Gamboa, head of investor relations department. However, Tansingco said better margins, trading performance, fees and commissions, customer coverage, and consumer loan growth would boost loan portfolio this year. In its annual report, Metrobank said it would continue strong risk management culture by promoting credit excellence and focusing on market and operational risks. It will push for more initiatives to improve operational efficiency, specifically in delivery channel optimization and cost management. It will preserve asset quality by maintaining an aggressive approach to nonperforming loans and real and other properties acquired disposal to reduce its bad asset ratio to a desired level of below five percent. The bank will pursue diversifying into other income sources by re-thinking its pricing strategy, selling more products that "assure safety of principal", improve on product offerings and expand client base by increasing presence through electronic channels and below-the-line marketing activities. "If the situation worsens, it is likely we will see deterioration in the asset quality, credit default. What we like to emphasize is we have built our systems over the last five years centered on credit excellence and risk management," Gamboa said. While Sy-led Banco De Oro Unibank, Inc. has dislodged Metrobank as the country's top lender, Tansingco admitted "now is not the time to grow." "As our president have said, we are not looking at size as a key. We are also looking at quality of the balance sheet and sustainability of the business. We are in a strategy that is consistent: stronger balance sheet from the quality of earnings. We will do what it takes to maintain that course. We intend to be the biggest in the long term," he said. "Now is not the time where you want to take in risks you cannot control or absorb. We are generally optimistic about the economy; we are cautiously optimistic. There are surprises that can pop out such as the swine flu. If it will be as disastrous as SARS was to Hong Kong to the global economy, we have to tighten our belts. The economy is still in a precarious place. There are several surprises that can come in. You have to be very prudent at this time," he added. Gamboa said Metrobank has to be a quality bank to achieve being the best bank. "Our president keeps on harping about improving asset quality, pursuing growth without the expense of credit quality. Those are the key things we are looking at: risk management, operational efficiency. Size has advantages but it will not be the sole strategy," she added.-Ruby Anne M. Rubio, GMANews.TV