FIRST Metro Investment Corp., the investment banking arm of the Metrobank Group, saw its net income plunge almost 80 percent last year in the absence of non recurring trading gains and with a lower revenue stream after it sold a large stake in a power generating unit.
In a statement, FMIC said the drop in earnings was due to the sale of its 40 percent stake in unit Global Business Power Corp. (GBPC) which greatly impaired its profits as well as the lack of one-time trading gains last year.
The company sold a 40 percent stake in GBPC, considered as the largest independent power producer in the Visayas, to Orix Corp. and Meralco PowerGen Corp. in 2013.
Despite the lower income in 2014, First Metro president Roberto Juanchito Dispo remains optimistic for this year’s operations.
Dispo said: “We see a very favorable economic environment in 2015, which will augur well for our businesses. With low inflation and money growth returning to its desired levels, we see little chance of a policy rate hike before the fourth quarter.”
“As we have forecast, there will be a rush into bond issuances due to the bunching of maturity bonds previously issued and the usual issuers have already exceeded their single borrower’s limit (SBL),” Dispo said.
“We are also very bullish about the equities market; we anticipate the PSEi [Philippine Stock Exchange index] to reach the 8,300 to 8,500 levels. Hence, we are optimistic that 2015 will be a good year not only for First Metro but more importantly for the entire capital market,” he added.
Last year, the company’s return on equity stood at 12.59 percent, while return on assets was at 3.06 percent.
By segment, FMIC’s financial markets group sales reached P1.27 billion from the interest income of fixed-income securities, trading gains from the sale of government securities, and distribution and brokering fees.
The investment banking group’s sales went up 7 percent to P512 million from P479 million in 2013 on various listing transactions last year via underwriter and arranger dealings.
The transactions included the P3.16-billion initial public offering (IPO) of Century Pacific Food Inc. and the P33.3-billion ($750 million) lending facility for Pagbilao Energy Corp.
The company also generated P32 million from its investment advisory and trust group, up 10 percent from P29 million the year before.
Earnings from subsidiaries and affiliates stood at P1.1 billion, consisting of P515 million from First Metro Asset Management Inc. and the mutual funds aggregate revenues, P343 million from AXA Philippines, P154 million from Orix Metro Leasing, P74 million from PBC Capital and P52 million from First Metro Securities Brokerage Corp.
Non-operating income was at P962 million, sourced from the sale of investments in Charter Ping An, Toyota Manila Bay Corp. and Toyota Cubao.
FMIC’s total resources stood at P69.88 billion. Capital funds reached P18.31 billion, 3-percent lower than 2013’s P18.95 billion balance. Its capital adequacy ratio under Basel 3 remains healthy at 30.44 percent.
Established more than 50 years ago, FMIC is involved in investment banking, servicing the Philippine capital markets.