Metrobank's treasury gains down 43% to PHP1.8b

But it was offset by lower opex and provision for credit losses.

Maybank Kim Eng reported that Metrobank's core profit of PHP18.2b in 2015 was up 80%. This excludes one-off gains from the sale of investment in associates (PHP1.22b) and real estate properties (PHP8.3b) in 2014.

"On a reported basis (post-share of hybrid capital securities), income was down 7.6%. Nevertheless, this was better than our and consensus estimate by 7%. Net interest income and fees were on target but the bottom line was dragged by weaker-than-expected treasury gains, partially offset by lower opex and provision for credit losses."

Here's more from Maybank Kim Eng:

Loan growth improved to 17% in 4Q15
A substantial pick-up in lending was seen in 4Q15, rising 17% YoY across all segments, from just 10% the previous quarter. Several corporate loans were booked in Oct, changing the loan mix to 75% commercial and 25% retail from 72:28 in 9M15.

We estimate NIM contracted ~21bps YoY to 3.56% but was steady QoQ, supported by a 3bp decline in average funding costs on strong CASA deposit growth (+18%).

Good credit quality led to lower credit cost
Non-interest income fell 36% YoY on weaker-than-expected trading and FX gains of PHP1.8b (-43.8%). Fee-based income increased 10% but gross revenue still lagged 10%. This was offset by lower-than-expected operating expense (-5.1%) and provision for credit losses (-57.5%).

Credit cost was significantly lower at 23bps from 64bps in 2014, supported by good credit quality with NPL ratio of 0.98% (from 0.99% in 2014). We estimate reserve cover ratio fell to 111% from 171%. Provision likely will rise this year to PHP3.4b (+65%) for a cover ratio of 122%.