FIRST Metro Investment Corp. (FMIC), the investment banking arm of the Metrobank Group, said its consolidated net income in the first half plummeted 76 percent from a year earlier as the company reeled from an industry-wide decline in trading gains.
In a statement on Thursday, FMIC reported consolidated net income of P1.64 billion at the end of the first half, down sharply from the P6.76 billion it reported in the same period last year.
However, FMIC said its consolidated net income exceeds the company’s first-half target by 24 percent, while return on equity is healthy at 15.53 percent.
“The downturn in trading gains, an industry-wide setback, continues to affect our profit, but our core business—investment banking—has contributed significantly not only to the company’s bottom line but more importantly in the capital markets,” said FMIC president Roberto Juanchito Dispo.
“For the first six months, First Metro was involved in 77 percent of the total domestic corporate bond issuances, raising nearly P90 billion,” Dispo said.
FMIC’s Financial Markets Group posted net revenue of P955 million for the period, far below last year’s comparative income of P3.63 billion but 9 percent higher than the P877 million target for the period.
The Investment Banking Group, on the other hand, generated total fee income of P288 million, P74 million or 34 percent higher than in the same period last year.
FMIC noted that the group completed a total of 12 deals, including the initial public offering of Century Pacific Food Inc.; Cebu Holdings Inc.’s P5 billion fixed rate bonds; SM Investment Corp.’s P15 billion fixed rate bonds; Cosco Capital Inc.’s P5 billion fixed rate notes facility; Pagbilao Energy Corp.’s P33.31 billion project finance; Ayala Land Inc.’s P8 billion fixed rate bonds; and National Grid Corporation of the Philippines’ P21 billion fixed rate notes facility, among others.
Meanwhile, the Investment Advisory and Trust Group raised P16 million in advisory and trust fees, 14 percent or P2 million higher than last year’s result of P14 million.
FMIC also reported that net earnings from its subsidiaries and affiliates totaled P673 million. It said non-operating income of P614 million includes net gains from the sale of investments in Charter Ping An Insurance Corp., Toyota Manila Bay Corp. and Toyota Cubao Inc., it said.
At the same time, First Metro’s consolidated assets stood at P82.56 billion. Capital funds ended at P18.33 billion, P622 million or 3 percent lower than the end-of-year balance of P18.95 billion, while capital adequacy ratio remains healthy at 18.93 percent under Basel III.
“The next half of 2014 presents more opportunities for growth. With the still low domestic interest rates, corporates will continue to tap the capital markets and the momentum on bond issuance will be maintained until the end of the year,” FMIC chairman Francisco Sebastian said.
“Financing for infrastructure, power and PPP [public-private partnership] projects will also excite the market as seven PPP projects with an aggregate build-up cost estimate of P63 billion have already been awarded,” Sebastian added. MAYVELIN U. CARABALLO