Dear Fellow Shareholders,

In our past 60 years as a recognized leader in the Philippine banking industry, we at Metrobank have navigated the ebbs and flows of the global and domestic economies.

2022 was no different.

Unprecedented Challenges

The COVID-19 global pandemic entered its third year. While mobility restrictions were eased and most economies started reopening in 2022, other headwinds emerged: a geopolitical tension between Russia and Ukraine, the ensuing global supply chain disruption and an energy crisis especially in Europe, as well as the shockwaves in the global commodities market that triggered inflationary pressures. It was also the year China adopted a zero-COVID policy and further tightened its lockdown restrictions. In the process, its economy slowed, compounding global supply chain woes.

Whatever hope of a faster global economic rebound was dashed because of these unprecedented challenges. Based on World Bank estimates, global GDP growth slowed to 2.9% in 2022 from 6% in 2021.

Inflation hogged the headlines in 2022. Worries of a runaway inflation prompted the U.S. Federal Reserve to adopt a hawkish monetary policy stance, prompting other central banks, including the Bangko Sentral ng Pilipinas (BSP), to follow. The BSP hiked policy rates by a total of 350 basis points to 5.5% by end-2022 to stem the weakening of the peso against the U.S. dollar and rising inflation expectations due to possible increases in wages, transport fares, and the retail prices of commodities. Full-year average inflation jumped to 5.8% from 3.9% in 2021 due to these inflationary pressures.

The resilience of the Philippine economy, however, was evident amid these global headwinds. Coming from a position of strength, we managed to post a GDP growth of 7.6% in 2022 versus 5.7% in 2021 — among the best-performing emerging Southeast Asian economies. The reopening of the domestic economy led to “revenge” spending and travel, boosting personal consumption and ultimately driving overall GDP growth.

Fulfilling our promise

Metrobank, its subsidiaries, and our over 17,000 employees across the country, exhibited this resilience despite the challenges we faced in 2022. Our strength is anchored on the six decades that we have managed to deliver on our “You’re in Good Hands” promise to our clients, partners, employees, local communities, and other stakeholders.

We continue to deliver meaningful banking to our clients by being their trusted partner and adviser, making banking easy and secure, and offering the right products for their evolving needs.

We strive to innovate by investing in digital transformation and in the training and development of Metrobankers.

We honor our commitment to our communities by championing causes that uplift lives, inspiring Filipinos in the pursuit of excellence, and bringing people and institutions together through impactful partnerships.

We exercise financial discipline and prudent risk management, mindful of the trust reposed on us by our stakeholders.

Turning our 60th anniversary into a banner year

In the face of all the noise in 2022, we managed to turn our 60th anniversary into a banner year. We posted a record net income of PHP32.8 billion with gains across all fronts: rising loans, improving margins, healthy fee income levels, well-controlled operating expense growth, and lower provisions.

We grew our portfolio, leveraging on the growing needs of our customers as the economy continued to reopen. We lent PHP206 billion to stimulate trade and other activities and PHP4.34 billion to support micro and small enterprises. We further facilitated the remittance of USD8.32 billion to our customers. In support of developing reliable infrastructure and increase access of small-scale enterprises to markets, we financed public infrastructure projects through PHP239 billion in commercial loans. At the same time, the entire Metrobank Group mobilized private investors to help the government generate PHP1.5 trillion in capital funding.

In the process, we kept our balance sheet strong. Non-performing loans (NPLs) ratio improved to 1.9% with NPL cover still substantial at 172.4%. The Bank’s capital ratios remained to be one of the highest in the industry, with capital adequacy ratio at 17.7% and Common Equity Tier 1 (CET1) ratio at 16.8%. These make us well positioned to continue supporting the needs of a growing economy while remaining protected from any emerging market instability.

Our efforts at fulfilling our promises were again recognized by top financial publications. Metrobank was named as the country’s Bank of the Year by The Banker; received back-to-back awards from the Asian Banker as the Strongest Bank in the Philippines; recognized as the Best Bank in the country by Euromoney; and was awarded Best Corporate Bank and Best Domestic Private Bank by Asiamoney.

Pursuing excellence with you

We are not about to rest on our laurels. The accolades of 2022 and our successes these past 60 years demand that we continue to pursue excellence if we hope to continue creating a lasting and sustainable impact on people, society, and the environment.

We will continue investing in technology and people to make banking accessible, convenient and secure for our clients.

Empowering our customers to make the right financial choices will continue to be a priority. We have already put in place three Metrobank educational platforms: Earnest, Moneybility, and Wealth Insights. We hosted over 500 financial education-related events with an audience of over 100,000 through Metrobank and First Metro Investments Corporation (FMIC) Group. We will continue to pursue our financial education initiatives actively to give our customers the tools to make informed decisions about the financial products and services that are suited to their needs.

More importantly, we will keep on striving to be a responsible partner who actively participates in supporting communities during times of critical need, honoring individuals who can serve as role models of good governance and citizenship, promoting the causes of human capital development and the arts. Our support for Metrobank Foundation’s financial, in-kind grant assistance, and scholarship programs have assisted at least 107,551 individuals during this pandemic, 167 scholar-graduates, and 139 current technical vocational students.

Helping us in this journey are our Metrobankers, whose own good hands enable the fulfillment of our steadfast commitment to our customers and communities. I thank them for their hard work and personal sacrifices, and for always maintaining high standards of professional excellence.

I would also like to express our deep gratitude and appreciation for our shareholders, customers, and business partners who continue to trust us in times of both adversity and plenty. Your unwavering faith in Metrobank deeply encourages us to work harder to ensure that you are always in good hands.

Arthur V. Ty Chairman

In 2022, we were hopeful that the path to continued global recovery will be smooth and steady. The year, however, has proven to be a period of economic, societal, and geopolitical changes. On the flipside, we were also witness to rapid technological advancements that are changing the way we do things.

In this complex world, some are able to thrive in trying times while others struggle to survive. Those that are resilient find ways to not just navigate the murky waters of uncertainty, but rather transform challenges into opportunities. They treat these roadblocks as fuel for the journey ahead — propelling their pursuit of excellence.

Such is Metrobank.

Moving from strength to strength

Banking on our 60-year track record, we skillfully rode on the momentum of growth of the Philippine economy, which rose by 7.6% in 2022 from 5.7% in 2021 due to the further easing of COVID-19 quarantine and lockdown protocols that started in February 2020.

Metrobank posted all-time high earnings of PHP32.77 billion, growing 47.9% from PHP22.16 billion in 2021.

We were able to deliver stronger results on the back of better corporate and consumer lending businesses, healthy fee income, subdued operating expense growth, and lower provisions on stable asset quality.

Improving consumer and business confidence enabled us to post a 14.0% increase in net interest income to PHP85.53 billion in 2022, fueled by higher loan demand and better net interest margin of 3.6%.

Our gross loans rose by 13.9%, year-on-year, with the 15.2% growth in corporate and commercial loans providing the fillip, as businesses started to build their inventories and resumed their investment spending. We also saw a 28.6% jump in our net credit card loans as consumers started embarking on “revenge shopping” after experiencing pandemic fatigue for two years.

Improving consumer and business sentiment was also evident in the level of our total deposits, which went up by 15.1% year-on-year to PHP2.22 trillion from PHP1.93 trillion, with low-cost current and savings accounts (CASA) accounting for 66.6% or PHP1.48 trillion of our deposit base.

Meanwhile, non-interest income was supported by an 11.6% increase to PHP23.52 billion in fees and other income. Our continued initiatives to improve operating efficiency led to controlled operating expense growth of just 2.6% to PHP61.00 billion, bringing down the cost-to-income ratio to 54.3% from 59.0% in 2021. This helped drive a 24.0% rise in pre-provision operating profit to PHP52.03 billion in 2022.

More importantly, we managed to improve asset quality as our non-performing loans (NPLs) ratio further eased to 1.9% from 2.2% in 2021, and better than the industry’s 3.3%. NPL cover remained substantial at 172.4%, reflecting our strong ability to cover any potential risks to portfolio health.

Strong balance sheet is reflected on our capital ratios that remain to be one of the highest in the industry, with capital adequacy ratio at 17.7% and Common Equity Tier 1 (CET1) ratio at 16.8%, all well-above the minimum regulatory requirements

In all, our robust performance in 2022 propelled total consolidated assets 13.6% higher to PHP2.8 trillion, enabling us to solidify our status as the country’s second largest private universal bank.

Propelling our growth even further

Contributing to our stellar performance in 2022 were our key subsidiaries and affiliates in the Metrobank Group.

Philippine Savings Bank (PSBank), our thrift bank arm, achieved another milestone as it posted its highest-ever net income of PHP3.68 billion, up 138.94% from the previous year’s level. This came on the back of improved loan volumes, increases in non-core revenue streams, gains from operational efficiencies, and improvements in loan portfolio quality.

First Metro Investment Corporation (FMIC), our investment banking subsidiary, banked on its nearly six decades of experience in the industry and its in-depth knowledge of the domestic capital markets to solidify its 72% market share and earn the recognition, Best Securities House in the Philippines for 2022, by leading global financial publication Asiamoney. It again emerged as a key player in major issuances, completing 16 capital markets transactions and raising PHP1.1 billion in both debt and equity.

AXA Philippines (AXA), our insurance arm, marked its 23rd year of providing quality insurance products to Filipinos as one of the country’s insurance and financial management leaders, serving over one million clients. It further strengthened its market leadership with its merger with its subsidiary, Charter Ping An, which was completed and approved by the Securities and Exchange Commission on December 28, 2022.

ORIX METRO Leasing and Finance Corporation (ORIX METRO) managed to post a 25% increase in its net income to PHP206 million in 2022 due to lower interest expense. This came from lower debt levels after it surrendered its quasi-banking license in June 2022, given the change in its business model and market environment, while ensuring that it has ample liquidity and is able to implement fund management strategies to support business growth. ORIX METRO continues to implement its process improvement initiatives, anchored on improving customer experience.

An Unmissable Opportunity Ahead

It’s easy to talk about what we’ve done and what we’re doing well. While we should all be proud of the fruits of our hard work, we must continue to look to the coming year and beyond with guarded optimism, especially in the increasingly volatile environment we operate in. We also need to continue to reflect on our responsibility as one of the country’s largest allocators of capital and where we need to do better, in the pursuit of excellence.

So let me turn to how we are positioned to capture the massive opportunities ahead.

Buoyed by a resilient Philippine economy, consumers and businesses will gain greater confidence in spending, investing, and expanding. To support their growing and evolving needs in step with the economy’s strides, we need to train our sights on ways we can further enhance customer experience: building capacity to expand our arsenal of digital banking solutions, optimizing our branch network, improving our internal controls and operational efficiency, growing cross-selling opportunities, and investing in human capital.

Digital transformation calls for a robust IT infrastructure, as well as strong control and risk management practices. This compels us to make a more substantial investment in information security, process efficiencies, and risk management and control systems.

While we pursue continued profitability and growth, we must also ensure that our efforts do not come at the expense of our social structures and the environment. Mindful of our important role in financial intermediation, we will continue to focus our support for business endeavors that seek to reduce poverty and hunger, promote inclusive and equitable growth and quality education, build resilient infrastructures, and encourage innovation. We see these goals as aligned with the government’s own sustainability goals for 2023-2028.

As can be gleaned from this year’s Sustainability Report, we also continue to do our part in contributing to the pursuit of all United Nations Sustainable Development Goals, and we remain mindful of reducing the carbon footprint of our own operations. We will also continue to strengthen the linkage of our sustainability agenda and the corporate social responsibility programs of our Metrobank Foundation, Inc., and encourage our employee volunteerism-driven Purple Hearts Club.

Finally, we must also keep in mind that our passion for the pursuit of excellence will be for naught if we fail to deliver on our six-decade-old promise to our customers: that “You’re in Good Hands” with Metrobank.

We must not only be known to deliver Meaningful Banking services with relevant financial solutions, best-in-class customer experience, and secured and efficient operations. We must also be THE BANK that truly makes a real difference for every Filipino — whether they are our customer, our employee, our shareholder, or a member of the community we serve. If we continue to live our mission, embrace our responsibility, and grasp the unmissable opportunity to forever be the strongest bank that everyone can rely on, there is no limit to what we can achieve for our nation, for the world, for our planet we make better, in the year ahead and beyond.

Together with our employees and our senior management team, we would like to thank you, our partners, stakeholders, and customers, for the continued trust that you put in our good hands. Being awarded the Best and Strongest Bank would not have been possible without your unwavering faith in Metrobank and in our mission.

Fabian S. Dee President