Friday, 14 August 2009

First Metro first-half profit jumps 288%

Erik de la Cruz
Business Mirror
http://www.businessmirror.com.ph/home/banking-a-finance/14569-first-metro-first-half-profit-jumps-288.html

FIRST Metro Investment Corp. (FMIC), the investment-banking arm of the Metrobank Group, posted a 288-percent increase in net income for the first half of 2009 after securing major corporate debt deals.

Net income surged to P556.8 million, from P143.5 in the same period last year. The increased bottom line translates to a return on equity of 14.6 percent.

The results reflected the significant increase in investment-banking fees, gains from fixed-income trade and, improving interest margins, as well as better income contribution from subsidiaries, said FMIC president Francisco Sebastian.

With the company securing lead roles in almost all major corporate debt transactions in the first half, its revenue from investment banking soared 86 percent to a record P197.6 billion.

Among its recent deals were San Miguel Corp.’s P38.8-billion fixed-rate bonds, the Cebu Energy Development Corp.’s P16-billion project loan facility, Philippine Long Distance Telephone Co.’s P5-billion fixed-rate notes, Metrobank Card Corp.’s P3-billion fixed-rate notes, Globe Telecom Inc.’s P5-billion fixed-rate bonds and P5-billion corporate notes, and Aboitiz Power Corp.’s P3-billion fixed-rate bonds.

FMIC said in a statement it also posted “significant” growth in revenue from Treasury operations, including the trading of government securities, and in interest income.

“The effect of the higher average volume of securities portfolio handled in the first semester—P27.2 billion against P17.7 billion last year—was key to the 32-percent increase in interest income,” it said.

The company also said it had recovered from investment losses in equities given the 30-percent jump in the local stock market’s main index in the first half.

“Income from investment in stocks moved to positive territory at P96.7 million, as gains from stocks amounted to P262.1 million, offsetting the P165.4- million losses last year,” it said.

The company had total resources of P56.5 billion as of end-June, a 22-percent increase over the end-2008 level.

Sebastian said the company was, however, maintaining a conservative stance in risk-taking in the second half because “financial dislocations” were still possible.

“Although we can look back with some degree of comfort given our financial results for the first semester of 2009, we remain vigilant and deliberate in risk-taking given fragile and volatile global financial markets,” he said.

Like other investors, FMIC is keeping a wary eye on the Philippines’ budget deficit, possible buildup in inflationary pressures, and “increasing political tension” ahead of the 2010 elections.

“Our balance sheet is strong and we look forward to a heavy calendar in terms of investment-banking activities in the second half,” Sebastian said. “However, financial markets may remain fickle and fragile.”

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