Metropolitan Bank & Trust Co., the second-largest bank in the country, signed a P5-billion, 10-year loan agreement with Philippine Long Distance Telephone Co., the country’s leading telecommunications provider.
“According to PLDT, the 10-year loan facility is meant to partially finance PLDT’s capital expenditures for service improvements and expansion programs, as well as to refinance its existing loan obligations,” Metrobank said in a statement Tuesday.
“Through this partnership with PLDT, Metrobank shares in the telco’s goal to provide telecommunication services to Filipinos,” it said.
Earlier this month, global debt watcher Fitch Ratings downgraded PLDT’s long-term local-currency issuer default rating to ‘BBB+’ from ‘A,’ reflecting its expectation of a further deterioration in the firm’s funds flow from operation.
Fitch said PLDT’s expansion in 3G/4G was likely to push the capex/revenue ratio to 25 percent in 2015-2016, from 20 percent in 2014. “However, we expect capex to normalize to 20 percent of revenue after 2016.”
Fitch also forecasts PLDT’s operating Ebitda in 2015 to weaken to about P77 billion (from P80 billion in 2014) due to flat revenue and continued pressure on margins.
But Fitch expects PLDT’s market leadership to continue despite the stiffer competition in the industry.
The commercial business is one of Metrobank’s fastest-growing segments and a leading driver in its strong performance.
Metrobank in the first half this year, posted a slight increase in net income to P9.3 billion from P9.1 billion a year ago.
The bank delivered double-digit growth in both loans and deposits, realized stronger contributions from fee based-income and improved efficiencies with better cost management.
Metrobank ended the first half with an equity base of P189 billion, the highest in the industry, and reported total assets of P1.6 trillion. The bank reported a 20.3 percent capital adequacy ratio and a 16.3-percent common equity Tier 1 Ratio as of June 30, 2015, comfortably above the regulatory minimum. The capital ratios reflect the impact of the P32-billion stock rights offer completed in April 2015.
Metrobank booked P23.9 billion in net interest income, which now comprises close to 70 percent of total operating income. Despite continued competitive pressure and volatility in interest rates, net interest income growth improved in the second quarter as the bank focused on improving its asset and liability mix.
Consolidated deposits increased 12 percent year-on-year to P1.2 trillion. Low-cost CASA (current and savings accounts) deposits expanded 17 percent, supporting lower funding costs.
Net loans and receivables, meanwhile, grew 14 percent to P740.6 billion.
The bank continued to prioritize the expansion of the mid-market and SME segments, while rationalizing the overall loan portfolio mix. The strategy reflected positively on net interest margins, which improved to 3.6 percent at the close of the first half 2015.