1Q15 profits beat estimates. Metrobank booked Php5.1Bil in net income in 1Q15, 10.7%
lower year-on-year but ahead of COL and consensus forecasts at 26.0% and 26.8% of fullyear
estimates respectively. Profits were down from the same quarter last year after 1Q14 saw
significant non-recurring gains from the sale of a relatively large investment property and its
33.3% stake in Charter Ping An. Excluding those one-time items, MBT’s core earnings grew
50% year-on-year. Meanwhile, MBT’s profits ended above estimates on stronger-than-expected
trading income. The first quarter performance translates to an annualized ROE of 12.1%.
Rebound in trading gains leads to outperformance. MBT’s outperformance for the period
was largely due to a pickup in trading revenues. Trading and FX gains more than doubled
from Php865Mil in 1Q14 to Php2.3Bil in 1Q15. Similar to the other banks that booked one-time
trading gains for the first quarter, we believe that MBT took the opportunity to further lock in gains
during the period after interest rates briefly dropped in January. Note that interest rates fell from
3.9% as of end 2014 to as low as 3.1% in early February, before settling at around 4.4% today. In
terms of MBT’s investment securities portfolio, the bank continued the shift from AFS securities
to HTM securities. As of end March, HTM securities accounted for 37% of its total portfolio, up
from 34% as of end 2014 and 18% as of end 1Q14.
Reiterate BUY rating. We currently have a BUY rating on MBT with an FV estimate of Php109/
sh based on 1.8X 2015E P/BV. The recently concluded stock rights offering should also address
market concerns that its capital base will not be able to support its aggressive growth. At
Php92.00/sh, MBT is trading at 1.5X 2015E P/BV. This is lower compared to that of the two
other big banks BDO (2.1X) and BPI (2.55X).
- COLfinancial
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