Metropolitan Bank and Trust: Markedly Undervalued Bank

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Disappointed bank investors should look at this opportunity

Share price of Metropolitan Bank and Trust (MBT) did not escape the recent Philippine stock market rout so and has fallen nearly 13 percentage points so far this year.

Some of the decline can be attributed to its stock offerings but nonetheless the bank did good in its 2017 operations.

MBT recorded strong 17.8% rise in revenue, or interest income in financial firms term, and a mere percentage points or 0.76% increase in profits.

MBT has allocated 817 million more to its non-controlling interest therefore resulting to lower profitability for shareholders in 2017 compared to 212 million more in 2016.

The second largest bank in the Philippines in terms of assets experienced an interesting 0.71% decline in book value to 204.1 billion giving it a price-book value multiple of 1.3x compared to its industry’s 3x.

MBT had a decline in its Common Equity Tier 1 ratio to 11.79% from 12.54% a year earlier.

The bank’s non-performing loans were maintained at a ratio of 1.01% as of December 2017.

MBT’s profit metric, net interest margin, ended at 3.75% in 2017 compared to 3.43% in 2016.

“We are pleased to report positive results in our core business. The strength of our deposit franchise continues to support our loan growth, particularly in the commercial space as we help finance the expansion plans of our customers. Core revenues increased at a healthy rate, while operating expense growth was capped to single-digit.”

“Our momentum continues to build up, and we are well-positioned to accelerate our growth plans moving forward.”

Metrobank President Fabian S. Dee

In the past three years, MBT raised 74 billion in financing activities and provided 10.3 billion in shareholder dividends.

The bank had 353.6 billion in cash as of December 2017.

COL Financial, a reputable brokerage firm in the country, rated MBT a buy with 103/share value. Personal estimates indicated a per share figure of 146/share.

Disclosure: MBT investor.

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