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Metrobank Dividend Signals Stability, Not Aggression


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Disclaimer: This is for informational purposes and is not investment advice. Figures are taken from company disclosures and exchange data; valuation ratios include the author’s calculations based on cited inputs.



Metropolitan Bank & Trust Co. (MBT) is once again signaling balance-sheet confidence—but not haste—through its latest dividend declarations, reinforcing its reputation as a conservative, capital‑first lender in a tightening earnings environment.

The bank announced a ₱1.50 per share regular cash dividend alongside a ₱2.00 per share special dividend, both payable on March 26, 2026, bringing total cash distributions for the year to ₱5.00 per share. This maintains a payout structure that has been consistent since 2024: a stable base dividend complemented by a discretionary special payout.

Earnings Cover Remains Comfortable

Metrobank’s FY2025 net income attributable to equity holders reached ₱49.7 billion, translating to earnings per share of ₱11.06. Against an annual cash dividend of ₱5.00, this implies a payout ratio of roughly 45%, well within conservative banking norms and comfortably supported by recurring earnings.

This level of coverage underscores that the current dividend is not capital‑driven, but earnings‑funded—an important distinction for income‑oriented investors. Unlike peers that rely on asset sales or temporary trading gains, Metrobank’s dividends continue to be anchored on core banking income, particularly net interest income, which rose over 9% year‑on‑year in 2025.

Capital Strength Enables Flexibility

Dividend sustainability is further reinforced by the bank’s robust capital position. As of end‑2025, Metrobank reported a Common Equity Tier 1 (CET1) ratio of 16.12% and a total capital adequacy ratio of 16.81%, both well above regulatory minimums. Liquidity metrics such as the liquidity coverage ratio and net stable funding ratio also remain comfortably compliant.

This excess capital gives management the flexibility to declare special dividends without committing to a permanent increase in regular payouts—a pattern evident in recent years.

Why Dividends Are Being Maintained, Not Raised

Despite the strong headline numbers, Metrobank’s decision to maintain rather than raise its regular dividend reflects emerging pressures beneath the surface.

First, net interest margin (NIM) continues to compress, easing to 3.64% in 2025 from 3.77% a year earlier. Higher funding costs, competitive deposit pricing, and the lag in loan repricing have weighed on margins, limiting earnings growth visibility.

Second, credit costs are rising. Provision for credit and impairment losses nearly doubled year‑on‑year, driven largely by higher delinquencies in unsecured consumer segments, particularly credit cards and auto loans. While overall asset quality remains manageable and non‑performing loans are still contained, the upward trend has prompted management to stay cautious.

Third, profitability ratios have softened. Return on equity slipped to 12.32% from 12.97% in 2024, while return on assets declined to 1.34%. These are still healthy levels but do not yet justify locking in a higher recurring dividend.

Strategic Conservatism at Play

Metrobank’s dividend stance also reflects its institutional character. As a systemically important bank, management has historically prioritized capital preservation and balance‑sheet resilience over aggressive shareholder distributions. Special dividends serve as a release valve for excess capital, while keeping the regular dividend at ₱1.50 per share protects flexibility should macro or credit conditions deteriorate.

Outlook

For now, the message to investors is clear: the dividend is secure, but growth will be selective. A sustained improvement in margins, moderation in credit costs, and a rebound in return metrics would likely be required before Metrobank considers raising its base dividend.

Until then, shareholders can expect the bank to continue walking the line it has drawn—rewarding investors, but never at the expense of prudence. 

We’ve been blogging for free. If you enjoy our content, consider supporting us!

Disclaimer: This is for informational purposes and is not investment advice. Figures are taken from company disclosures and exchange data; valuation ratios include the author’s calculations based on cited inputs.

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