{"id":330196,"date":"2024-11-04T12:09:59","date_gmt":"2024-11-04T04:09:59","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=330196"},"modified":"2024-11-04T12:10:01","modified_gmt":"2024-11-04T04:10:01","slug":"stock-in-focus-metrobank-mbt-4-nov-2024-by-ap-securities","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-metrobank-mbt-4-nov-2024-by-ap-securities\/","title":{"rendered":"Stock in Focus: Metrobank (MBT) – 4 Nov 2024 by AP Securities"},"content":{"rendered":"\n

Summary of Broker’s Recommendation<\/h2>\n\n\n\n
Stock Code<\/strong><\/td>MBT<\/td><\/tr>
Company Name<\/strong><\/td>Metropolitan Bank and Trust Company (Metrobank)<\/td><\/tr>
Broker<\/strong><\/td>AP Securities<\/td><\/tr>
Opinion Issued on<\/strong><\/td>4 Nov 2024<\/td><\/tr>
Recommendation<\/strong><\/td>Hold<\/td><\/tr>
1-Year Target Price<\/strong><\/td>PHP 84.34<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n
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While we do admire MBT\u2019s prudent approach to lending, we feel that at least some measure of risk-taking is necessary to push MBT\u2019s numbers from being consistently \u201cin-line\u201d to \u201coutperform\u201d. <\/p>\n\n\n\n

The bank\u2019s conservativeness also seems baked into how the market values the stock, as it usually trades at a 25% discount to its peers in terms of price-to-book valuations. In fact, the recent run-up in MBT\u2019s share price has narrowed this discount down to 8% and MBT\u2019s P\/B ratio now stands at 0.88x, which is almost at par with its 10-year average P\/B of 0.96x. Taking this into consideration, as well as the slim upside to our Target Price of P84.34, we maintain our HOLD rating on MBT.<\/p>\n\n\n\n

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Analysis and Opinion<\/h2>\n\n\n\n

MBT earnings roughly in-line, but slightly behind estimates<\/strong><\/p>\n\n\n\n

MBT\u2019s 3Q 2024 earnings of P12.1-Billion was 1.9% lower than consensus estimates for the period, with the year-to-date (YTD) net income of P35.7-Billion reached 74.6% of full-year forecasts. Loan growth remained robust at 15.6% year-on-year (YoY), powered by industry-leading corporate loan growth of 16.6% YoY. However, MBT saw a similar contraction in net interest margins (NIM) as BDO, with margins tightening by 29bps to 3.69% in 3Q 2024, bringing the YTD NIM down to 3.90% which is the lowest among the Big Three banks. Similarly, MBT delivered an ROE of 12.9% which is again the lowest compared to BDO\u2019s 15.0% and BPI\u2019s 15.6%.<\/p>\n\n\n\n

Locking in gains<\/strong><\/p>\n\n\n\n

MBT\u2019s earnings growth was further bolstered by P5.6-Billion in trading and forex gains, as the bank seize market opportunities to actualize gains in its investment portfolio. These trading and FX gains were almost equal to MBT\u2019s fees and other non-interest income for the quarter, which shrank by 18.6% YoY to P6.1-Billion. It\u2019s
interesting to note that BPI also booked trading gains for the quarter, while BDO opted to hold on to its investment securities for as long as there is no need for the additional liquidity.<\/p>\n\n\n\n

A prudent approach<\/strong><\/p>\n\n\n\n

While we remain concerned about MBT\u2019s narrow NIMs and slim ROE, we acknowledge that the bank\u2019s apparent conservativeness also translates to good asset quality. Notably, MBT\u2019s NPL ratio of 1.59% as of end-September is significantly lower than BDO\u2019s 1.82% and BPI\u2019s 2.30%. This translated to a 48.2% YoY drop in provisioning costs which somewhat offset the 11.2% YoY increase in operating costs, driven by manpower, taxes and licenses, IT and marketing costs as the bank continued to invest for growth.<\/p>\n\n\n\n

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Check how many brokers recommend this stock<\/h2>\n\n\n\n
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All Stock Rankings<\/a><\/blockquote>