The Battle of the Flagship Banks: The Tys’ Metrobank and the Sys’ BDO Take Different Routes Through a Difficult Half

 

Metrobank’s interest engine accelerated in the first half of 2026. BDO, however, paired loan growth with expanding deposits, steadier noninterest revenue and tighter cost control.

MANILA — The first-half results of the Philippines’ two largest listed banks offered an instructive contrast in how lenders can produce nearly identical profit growth from very different operating performances.

Metropolitan Bank & Trust Company, or Metrobank, reported the faster expansion in its core interest-earning business. Its net interest income rose 12.8 percent from a year earlier, outpacing the 10.6 percent increase reported by BDO Unibank.

But BDO’s overall result was more balanced. It grew loans and deposits together, increased noninterest income and held expense growth below the rate of revenue expansion. Metrobank, by contrast, contended with shrinking deposits, a sharp decline in trading-related revenue and faster growth in operating costs.

The result was an unusual near tie at the bottom line. BDO’s first-half profit attributable to shareholders edged up 0.3 percent to 40.72 billion pesos, while Metrobank’s increased 0.2 percent to 24.90 billion pesos. During the second quarter, profits declined at both lenders: 1.4 percent at BDO and 2.3 percent at Metrobank. 

Behind those modest changes, however, the two banks were moving in meaningfully different directions.

Metrobank’s interest advantage

Metrobank’s strongest achievement was in net interest income, the difference between what a bank earns on loans and securities and what it pays depositors and other funders.

That figure rose to 67.74 billion pesos in the first half from 60.04 billion pesos a year earlier. Interest income increased 8.6 percent, supported by higher earnings from loans and investment securities, while total interest and finance charges were virtually unchanged. Metrobank’s net interest margin held at 3.74 percent, compared with 3.73 percent a year earlier. 

BDO generated considerably more net interest income in absolute terms — 108.51 billion pesos — but its growth rate was slower at 10.6 percent. Its interest income rose 12.4 percent, while interest expense increased 16.5 percent as the cost of deposits and other borrowings climbed.

The comparison illustrates Metrobank’s central strength in the period: it extracted more incremental interest income without a corresponding rise in total funding costs. That allowed the bank’s core spread business to grow substantially faster than its headline profit.

But the advantage ended there.

BDO’s broader revenue cushion

BDO was better able to defend earnings outside traditional lending.

Its other operating income rose 3.9 percent to 39.44 billion pesos. Fee and commission income increased modestly, trust fees climbed 12.8 percent, and foreign-exchange gains more than doubled. Income from insurance operations also rose 14.3 percent to 4.47 billion pesos. Those gains more than offset a decline in trading income.

Metrobank’s noninterest performance moved in the opposite direction. Other income declined 21 percent to 13.90 billion pesos as trading, securities, and foreign-exchange gains fell to 1.30 billion pesos from 5.38 billion pesos. Fees and commissions rose 8.9 percent, but the improvement was not enough to compensate for the reduction in market-related earnings.

Trading revenue is, by nature, less predictable than net interest or fee income. Its decline does not necessarily indicate deterioration in Metrobank’s underlying franchise. Still, it meant that the bank entered the period with less revenue diversification than BDO, whose trust, foreign-exchange, fee and insurance businesses supplied a broader cushion.

That difference became more important as expenses rose.

The cost of growth

BDO’s operating expenses increased 6.9 percent to 88.05 billion pesos. Compensation, occupancy, taxes and outsourced support costs all rose, but stronger revenue allowed the bank’s disclosed efficiency ratio to improve slightly. 

Metrobank’s expenses increased 10.1 percent to 42.44 billion pesos, driven by manpower, technology, occupancy, taxes, licenses and advertising. Its operating efficiency ratio deteriorated to 52.37 percent from 50 percent, indicating a larger share of operating revenue was consumed by costs. 

For Metrobank, the combination of falling noninterest revenue and double-digit expense growth absorbed much of the benefit from its strong interest-income performance.

BDO faced a different drag: credit provisions.

Its impairment charges jumped 76.1 percent to 12.77 billion pesos from 7.25 billion pesos. Metrobank’s provisions rose a more moderate, though still substantial, 26.8 percent to 7.46 billion pesos.

The asset-quality signals were mixed. BDO disclosed an improvement in its nonperforming-loan ratio to 1.64 percent from 1.75 percent, suggesting that at least part of the increase in provisions reflected reserve building or loan growth rather than an outright rise in reported problem loans. Metrobank’s consolidated nonperforming-loan ratio worsened to 1.81 percent from 1.54 percent, with its consumer business carrying a particularly heavy provisioning burden. 

BDO therefore reported the more favorable current trend in nonperforming loans, but its unusually large increase in impairment charges remains one of the most important questions surrounding its results.

Two versions of liquidity

The liquidity comparison is less straightforward because the banks held different advantages.

Metrobank maintained the more conservative loan-to-deposit position. Its disclosed ratio was 81.11 percent, up from 79.64 percent a year earlier but still well below BDO’s roughly 86.6 percent ratio based on its June balances. A lower ratio generally indicates that a bank has more deposits relative to loans and, all else being equal, a larger funding cushion. Metrobank also reported liquid assets equal to 44.32 percent of total assets. 

On that narrow balance-sheet measure, Metrobank had better liquidity headroom.

But BDO showed the stronger liquidity trend.

Its deposits rose 9 percent from the end of 2025 to 4.57 trillion pesos, exceeding its 7 percent expansion in net loans. Deposits therefore continued to fund the bank’s lending growth, with demand, savings and time deposits all increasing. BDO also generated 124.07 billion pesos of operating cash flow during the first half and ended June with 518.09 billion pesos in cash and cash equivalents. 

Metrobank’s deposits declined 2.7 percent from year-end to 2.59 trillion pesos even as net loans grew 5.9 percent. The bank compensated partly by increasing bills payable and securities sold under repurchase agreements by 14.8 percent to 609.36 billion pesos. Its ending cash and cash equivalents stood at 248.27 billion pesos. 

Metrobank’s liquidity is not necessarily strained. Its lower loan-to-deposit ratio gives it room to lend, and management said cash inflows expected over the following 12 months would cover 67.21 percent of deposits contractually due during that period. Including marketable securities raised the coverage to 89.06 percent, while actual deposit behavior has historically been more stable than contractual maturity schedules imply.

Still, reliance on wholesale borrowings and repurchase funding is generally more sensitive to market conditions than a broad base of customer deposits. If Metrobank’s deposit contraction persists, the cost of sustaining loan growth could rise.

The distinction is therefore important:

Metrobank had the stronger static liquidity position because it carried fewer loans relative to deposits. BDO had the stronger funding momentum because deposits were growing faster than loans.

For investors evaluating resilience rather than a single ratio, BDO’s deposit growth may be the more encouraging signal. For investors focused on immediate balance-sheet capacity, Metrobank retained the larger cushion.

Capital, dividends and competing priorities

BDO’s equity attributable to shareholders increased 2.3 percent from year-end to 655.91 billion pesos. Metrobank’s declined 2.8 percent to 409.71 billion pesos, affected by dividends and unrealized losses on securities carried through other comprehensive income. Both institutions recorded about 15 billion pesos of net unrealized losses on debt securities held at fair value through other comprehensive income. 

Metrobank nevertheless reported a higher capital adequacy ratio of 14.86 percent, compared with BDO’s disclosed 14.22 percent. 

The banks’ dividend policies also point to different priorities. Metrobank declared 5 pesos a share for 2026, consisting of 3 pesos in regular dividends and a 2-peso special dividend. Against annualized first-half earnings, that implies a payout of roughly 45 percent. BDO’s disclosed annual dividend was considerably smaller relative to its earnings, leaving it with more capital to support growth. 

For income-oriented shareholders, Metrobank’s capital return is the more conspicuous attraction. BDO’s case rests more heavily on scale, deposit gathering and the ability to reinvest retained earnings.

A contest decided beyond the bottom line

Headline profits make the two banks look remarkably similar: both were nearly flat for the half and recorded modest declines in the second quarter.

But BDO’s underlying performance was more balanced. Loans and deposits expanded together. Noninterest income grew. Its cost ratio held steady or improved. And its reported nonperforming-loan ratio moved lower, even as the bank set aside substantially more money for possible losses.

Metrobank’s core interest franchise was stronger than the final earnings figure suggests. Net interest income grew faster, margins remained resilient, and the bank retained a lower loan-to-deposit ratio and a higher reported capital adequacy ratio. Yet those strengths were offset by weaker market income, rising expenses, contracting deposits and worsening consolidated asset quality.

The first half did not produce a decisive winner in profit growth. It did, however, reveal the character of each institution.

Metrobank entered the second half with the faster interest engine and greater immediate liquidity headroom. BDO entered it with the broader revenue base, stronger deposit momentum and more balanced operating machinery.

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.