First Metro Investment income doubles in first semester

MANILA, Philippines - Despite the outstanding performance of First Metro Investment Corp. (First Metro) in terms of net income in the first semester of 2009, officials nonetheless expressed concern over the prospect of a weaker second semester.

First Metro reported a net income of P556.8 million in the first semester of 2009, or 288 percent better than the P143.5 million recorded in the same period a year ago. Return on equity was placed at 14.6 percent.

First Metro is the investment bank arm of the Metrobank Group of Companies.

First Metro president Francisco Sebastian said that while the much-feared financial Armageddon can finally be set aside, the financial dislocations globally are still in the cards.

“Locally, our concerns are the budget deficit, possible reversal of the low inflation environment, and very much into the second half, increasing political tension with the 2010 elections,” Sebastian said.

He added: “Our balance sheet is strong and we look forward to a heavy calendar in terms of investment banking activities in the second half.  However, financial markets may remain fickle and fragile.  We will therefore be conservative in our risk taking in the second half.”

In the first half of the year, First Metro managed to secure lead roles in almost all major corporate debt transactions. 

Revenues from investment banking activities soared to a high of P197.6 million, or an 86-percent improvement year-on-year.

Notable deals were: the P38.8-billion fixed rate bonds of San Miguel Corp.; P16-billion project loan facility of the Cebu Energy Development Corp.; the P5-billion fixed rate notes of the Philippine Long Distance Telephone Co.; the P3-billion fixed rate notes of Metrobank Card Corp.; P5-billion fixed rate bonds and P5-billion corporate notes of Globe Telecom; and the P3-billion fixed rate bonds of the Aboitiz Power Corp.

Income from Treasury operations grew as revenues of P1.26 billion was generated from trading government securities as well as interest income. The effect of the higher average volume of securities portfolio handled in the first semester – P27.2 billion against P17.7 billion last year – was key to the 32-percent increase in interest income.

Income from investment in stocks moved to positive territory at P96.7 million, as gains from stocks amounted to P262.1-million offsetting the P165.4 million losses last year.

Total resources as of end of semester stood at P56.5 billion, a 22-percent increase over the end of 2008 balance of P46.2 billion.

Capital funds reached P7.9 billion, seven percent higher than the 2008 yearend level due to the net effect of the first semester income and the market-to-market gain, mainly from listed equity securities. 

Capital adequacy ratio (CAR) remained strong at 21.8 percent.