Metrobank seeks BSP okay on flexible notes

MANILA, Philippines - Metropolitan Bank & Trust Co. (Metrobank) is seeking Bangko Sentral ng Pilipinas approval to issue notes in either peso or dollar denomination to raise capital for Basel 3 compliance.

In a letter to the Philippine Stock Exchange (PSE), Metrobank investor relations head Juan Placido Mapa III said its board has approved an amendment on the issuance of Basel 3-compliant Tier 2 notes.

“This provides Metrobank the flexibility to issue the notes in either peso or dollar, or a combination of board, subject to BSP approval,” he said.

Metrobank earlier said they have conducted roadshows for a planned $500 million Tier 2 capital notes issue.

The bank has commissioned JP Morgan Securities and UBS AG, Hong Kong branch to arrange the roadshow.

It said the planned issuance would also allow the bank to proactively manage its capital base for growth and refinancing of maturing capital securities.

The Basel 3 guidelines issued by the BSP in Jan. 15, 2003 requires that Tier-2 notes have a provision for the instrument to either be written off or converted to common equity upon occurrence of certain trigger events. The BSP circular further stipulates that banks must make the necessary amendments to their articles of incorporation to accommodate such a conversion.

For the past years, Metrobank has been implementing strategic approaches to improve its capital and financial strength.

Metrobank said it posted a compounded annual growth rate in net income of 37 percent over the past five years, hitting a high of P18.1 billion in the first semester of 2013.

It said 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 percent in 2009 to 1.8 percent as of June 2013, below the industry average of 2.7 percent.

While the bank has maintained majority of its loan book in corporate accounts, in recent quarters its consumer segment has delivered above-industry loan growth to help fuel the consumption demand in the Philippine economy.

At the end of the 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 percent regulatory limit with an 18.1 percent total CAR and 15.7 percent Tier 1 CAR.

“At these levels, the bank believes it is prepared to meet the new Basel 3 standards which take effect in January 2014,” it said.