OUTLIER Banking industry weakness weighs down Security Bank

NEWS of Security Bank Corp.’s (SECB) fund-raising via its five-year fixed rate note facility, coupled with the ongoing weakness from the banking industry in general, made it one of the most actively traded stocks last week.

SECB was the tenth most actively traded stock with a total of 3.596 million shares worth P815.338 million having exchanged hands on the trading floor from Sept. 17 to Sept. 21, according to data from the Philippine Stock Exchange.

Week-on-week, its share price was down by 7.4% to P168.5 on Friday from its Sept. 14 closing price of P182 apiece. Year-to-date, its share price was down by 33.6%.

Luis A. Limlingan, Managing Director at Regina Capital Development Corp. ascribed the stock’s price decline to the weakness surrounding the country’s banking industry.

“All the banks, including SECB… are getting hit hard,” Mr. Limlingan said, adding that banks have generally underperformed this year.

For Cristopher Adrian T. San Pedro, certified securities representative at Unicapital Securities, Inc.: [O]ne of the main reasons why it was actively traded was the news about the successful issuance of the $300 million USD Senior Unsecured Fixed rate notes...”

While the bond issuance “has no direct impact” on SECB’s stock price, Mr. San Pedro noted that there may be a possibility in which investors perceive it as an increase in the debt position of the company’s balance sheet. This, in turn, would affect the stock’s value in the short term.

The analyst likewise pointed to the net foreign selling on SECB last week, which contributed to the stock’s further decline.

Stock market data showed net selling on SECB amounted to P142.118 million on Sept. 17-21, a reversal of the P79.848-million net buying a week before.

The listed lender’s capital raising activity last week marked its maiden drawdown from its $1-billion medium-term note program established last month. The transaction is expected to be settled today and will be listed on the Singapore Stock Exchange.

The offering was 3.7 times oversubscribed, fetching tenders totaling $1.1 billion.

Local banks have been conducting various fund-raising activities ahead of tighter risk management requirement by the central bank which will take effect next year under the international Basel 3 standards.

Moving forward, Regina Capital’s Mr. Limlingan expects Security Bank’s stock price to remain subdued given the Bank’s financial performance: “the [Banks’] earnings will not be as strong, but I think it is only going to be for this year,” he said,

Mr. Limlingan placed the stock’s support and resistance at P162 and P176, respectively. Unicapital’s Mr. San Pedro, for his part, pegged the stock’s support at P166 and resistance at P189.

Security Bank booked a net income of P4.3 billion in the first half, down 18% a year ago primarily due to a continued decline in trading gains. —