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Moody's: Metrobank's planned stock rights offering a credit positive

Philippines-based Metropolitan Bank & Trust Co.'s plan to conduct a stock rights offering to raise up to 60 billion pesos is credit positive for the lender, Moody's said.

The rating agency said March 19 that the rights offering would add about 390 basis points to Metrobank's common equity Tier 1 ratio, which stood at 11.8% as of December 2017. The improvement would bring the bank's ratio well above the regulatory minimum of 10% after considering the buffer for domestic systemically important banks.

Moody's added that the offering will aid the bank's credit growth, while strengthening its capital buffers against risks.

Earlier in March, Metrobank obtained approval from the Philippine Stock Exchange to offer up to 819,827,214 common stock to eligible shareholders. The bank said the new capital will be utilized for the acquisition of the remaining stake it does not own in Metrobank Card Corp.

The agency expects the capital raising to be enough to support the bank's credit growth of approximately 20% until fiscal 2020, after which the bank's CET1 ratio will fall to 12% to 13%. The decline may result in Metrobank needing new capital as internal capital generation capacity slows down credit growth.

The offering will kick off March 22 and close April 4.

As of March 19, US$1 was equivalent to 52.13 Philippine pesos.