Security Bank earnings drop on lower trading gains

SECURITY BANK Corp. logged a lower net income in 2018, dragged by a decrease in trading gains and higher provisions for income tax.

In a disclosure on Thursday, Security Bank said it finished 2018 with a net profit of P8.6 billion, lower by 16% from its record-high income of P10.3 billion in 2017.

The lender attributed the lower bottom line to an 85% or P2 billion decrease in trading gains, as well as the 47% increase in provisions for income tax.

Still, the bank’s net interest income grew 7% to P20.8 billion from P19.4 billion the prior year.

Net interest income from consumer loans and deposits rose 30% to P15.7 billion, driven by the “continued expansion” of retail lending and low-cost deposits.

Total loans stood at P416 billion at end-2018, up from the P369 billion logged the previous year. Consumer loans grew 47% last year, comprising 20% of Security Bank’s total lending portfolio versus the 16% share in 2018. Wholesale loans, meanwhile, grew 7%.

The asset quality of the lender remained healthy, with its gross non-performing loan (NPL) ratio at 0.7%. Computed using the new central bank guidelines adopted in September, NPL cover was at 112%.

Security Bank’s deposit base also increased 18% to P489 billion last year as low-cost deposits expanded by 15%.

However, interest income from financial investments stood at P1.2 billion, 11% lower from a year ago.

The bank’s interest margins continued to improve as net interest spread on loans and deposits increased to 4.72% in the fourth quarter, up by 29 basis points quarter-on-quarter and up by 48 basis points year-on-year.

Meanwhile, service charges, fees and commissions grew 26% to P2.9 billion on the back of credit card, bancassurance, loan fees and deposit charges.

Operating expenses increased 10% in 2018, excluding provisions for credit and impairment losses. Security Bank’s cost-to-income ratio stood at 53.9%.

The bank also set aside P714 million for credit loss provisions.

Shareholders’ capital increased 4% to P109 billion in 2018 from P105 billion in 2017. Return on equity was at 8.1%. Overall, total assets of the lender stood at P767 billion, up 10% from the P756 billion in 2017. Its capital adequacy ratio was at 18.7%, while common equity Tier 1 ratio stood at 16.4%.

Security Bank shares finished at P165.80 apiece on Thursday, down P6 or 3.49%. •