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Banks (Finance)

Moody's Affirms Metrobank's Baa2 Ratings Despite Weakened Funding Metrics

Strategic Insights

— 1 min read

Metrobank's strong solvency, balanced against weakened funding and liquidity metrics, has led Moody's Investors Service to affirm its Baa2 ratings. The bank's robust asset quality and stable profitability underpin its strong solvency, with a reported nonperforming loans ratio of 1.6% as of March 2025. However, the bank's funding structure has deteriorated, with market funds increasing to 21% of tangible banking assets from 10% a year earlier. Moody's expects the bank to maintain its net interest margin by funding its growth with cheaper sources of funds.

Key Takeaways:

  • Moody's has affirmed Metrobank's Baa2/P-2 long-term and short-term local-currency and foreign-currency deposit ratings, as well as its Baa1/P-2 long-term and short-term local-currency and foreign-currency Counterparty Risk Ratings.
  • The bank's strong solvency is supported by its robust asset quality and stable profitability, with a reported nonperforming loans ratio of 1.6% as of March 2025.
  • Metrobank has maintained a strong loan loss buffer, with reported loan loss reserves as a percentage of problem loans at 151% as of March 2025.
  • The bank's funding structure has deteriorated, with market funds increasing to 21% of tangible banking assets from 10% a year earlier.
  • Moody's expects the bank to maintain its net interest margin by funding its growth with cheaper sources of funds.
  • Metrobank's liquidity buffer remains strong, with a liquidity coverage ratio at 184% as of March 2025.
  • Factors that could lead to an upgrade or downgrade of the ratings include changes in the bank's usage of market funds, unencumbered liquid resources, or related party lending.

Statistics:

  • Metrobank's reported nonperforming loans (NPL) ratio was 1.6% as of March 2025.
  • The bank's loan loss reserves as a percentage of problem loans were 151% as of March 2025.
  • The bank's market funds as a percentage of tangible banking assets increased to 21% from 10% a year earlier.
  • The bank's tangible common equity as a percentage of Moody's-adjusted risk weighted assets (TCE/RWA) declined to 13.8% from 15.3% a year earlier.
  • Metrobank's liquidity coverage ratio was 184% as of March 2025.
  • The bank's Common Equity Tier 1 (CET1) ratio was at 14.7% as of March 2025.

Sources:

  • Moody's Investors Service
  • "Banks" published in November 2024, available at https://ratings.moodys.com/rmc-documents/432741
  • "Rating Methodologies" page on https://ratings.moodys.com

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