Moody’s raises Metrobank’s financial strength rating

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The company's rating was raised to D+ from D due to stronger asset quality and high capitalization levels.

. Metrobank officials during a recent stockholder's meeting. Photo by Rappler/Aya Lowe

MANILA, Philippines – Metropolitan Bank & Trust Company (Metrobank), the banking unit of tycoon George Ty’s group, received a Bank Financial Strength Rating (BSFR) upgrade from Moody’s Investor Services.

In a disclosure to the PSE on Monday, April 29, Metrobank announced that its BSFR rating improved to D+/ba1 from D/ba2. The company attributed the upgrades to stronger asset quality and high capitalization levels.

The bank cut its non-performing loans (NPL) ratio to 1.8% in 2012. The figure is lower than the industry average of 2.0%.  The company also increased its NPL coverage in 2012 to 117% from 100%.

The bank also reported a Total Capital Adequacy Ratio (CAR) of 16.3% and Tier 1 CAR of 13.7% at the end of 2012.  The CAR indicates how much loss a bank can absorb. It is the ratio of the capital of a bank to its risk.  

“The recent rating upgrade by Moody’s reflects positively on our strategy to maintain superior asset quality and for prudent balance sheet expansion. We have built the foundations for long-term sustainable growth and we are well positioned to capitalize on the prospects of the vibrant domestic economy,” said Metrobank President Fabian Dee.

According to the Moody’s website, the BSFR rating represents the agency’s opinion on the safety and soundness of a bank. “Bank Financial Strength Ratings are a measure of the likelihood that a bank will require assistance from third parties such as its owners, its industry group or official institutions,” Moody’s said. 

“Banks rated D display modest intrinsic financial strength, potentially requiring some outside support at times. Such institutions may be limited by one or more of the following factors: a weak business franchise; financial fundamentals that are deficient in one or more respects; or an unpredictable and unstable operating environment.”

Metrobank has the largest consolidated branch network in the Philippines. The company had 828 branches across the country as of the end of 2012.

The bank posted a 40% hike in its net income to P15.4 billion in 2012. It attributed the increase to higher non-interest and net interest income. – Rappler.com

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