Metropolitan Bank & Trust Co. (Metrobank), one of the Philippines' largest universal banks by assets, recorded an attributable net profit of P12.3 billion in the second quarter, as robust interest earnings helped offset increased loan loss provisioning and weaker trading gains caused by market volatility.

The second-quarter result marked a 2.33% decline from P12.59 billion posted in the same period a year earlier, the bank disclosed to the stock exchange on Friday. Philippine lenders have been operating in an elevated interest rate environment, with the Bangko Sentral ng Pilipinas having maintained its benchmark policy rate at 6% since October 2023 to manage inflation.

First-half net earnings reached P24.902 billion, slightly higher than the P24.846 billion recorded a year prior, supported by steady loan growth, stable margins, and fee-based income.

Return on equity stood at 11.98%, down from 12.8% last year, while return on assets was 1.28%, compared with 1.42% previously.

Metrobank characterized the period as reflecting a "challenging" environment for the banking industry.

"The operating environment remained challenging in the first half, requiring us to stay disciplined and focused. Our results reflect the strength of Metrobank's core businesses, the continued trust of our clients, and our prudent approach to balancing growth and risk. We will continue to support our clients while pursuing sustainable growth in an uncertain environment," said Metrobank President Fabian S. Dee.

Net interest income for the second quarter rose 12.13% to P34.38 billion, driven by continued expansion in interest-earning assets. For the first semester, net interest earnings climbed 12.8% to P67.7 billion.

"Gross loans expanded by 12.4% year on year. Corporate and commercial loans continued to grow, posting a 12.8% year-on-year increase to support investment spending and higher working capital needs of customers. Consumer loans likewise rose by 11.1% on the back of growth in credit cards and mortgage loans," Metrobank said.

The net interest margin held broadly steady at 3.74%, compared with 3.73% a year earlier.

Other operating income fell 24.2% to P6.75 billion in the second quarter, primarily due to lower net trading, securities, and foreign exchange gains amid volatile financial markets. Higher fee-based income provided a partial offset. For the first half, other operating income totaled P13.9 billion, down 20.99% year on year.

Total operating expenses increased 10.36% to P21.3 billion for the quarter and 10.1% to P42.4 billion for the first semester. Metrobank attributed the rise to transaction volume-related taxes and technology spending tied to ongoing investments in digital capabilities.

The cost-to-income ratio was 52.37%, up from 50% a year prior.

Metrobank raised its loan loss provisioning to P4.09 billion in the second quarter from P3.27 billion a year earlier. First-half provisions increased to P7.46 billion from P5.88 billion.

The bank's nonperforming loan (NPL) ratio remained low at 1.81% as of June, up from 1.54% last year, while its NPL cover stood at 133.3%.

"This should continue to provide sufficient buffer against potential pressures on asset quality due to weaker macro conditions," Metrobank said.

Restructured loans remained "minimal" at 0.3% of total loans, the bank added.

On the funding side, deposits grew 10.4% to P2.6 trillion as of June. Low-cost current and savings accounts increased 6.4% and accounted for 60.5% of the total.

"Loan-to-deposit ratio edged up to 81.1%, still providing the bank with sufficient capacity to continue expanding lending activities," Metrobank said.

The bank's total assets rose 12.7% to P3.9 trillion at end-June, while equity increased 4.9% to P409.7 billion.

The capital adequacy ratio was 14.86%, with the common equity Tier 1 ratio at 14.22%, both comfortably above the Bangko Sentral ng Pilipinas' regulatory minimums. The liquidity coverage ratio stood at 150.1%.

— Bettina V. Roc