Security Bank net income up 20% to P10.3B in 2017

Security Bank Corporation’s (PSE: SECB) net income grew 20 percent to a record-high P10.3 billion in 2017. This was driven by a 22 percent or P3.5 billion increase in net interest income to P19.4 billion and a 15 percent growth in non-interest income to Php 5.7 billion.

Trading gains amounted to P2.4 billion, up 36 percent. Service charges, fees and commission income was P2.2 billion, up 3 percent. Total revenues increased 20 percent to P25.1 billion.

For the fourth quarter 2017, net income increased 49 percent year-on-year to P2.9 billion, driven by a 16 percent growth in net interest income to P5 billion and gain on sale of securities of P1.3 billion.

Loans increased 28 percent to P369 billion. Wholesale loans grew 25 percent, of which corporate loan growth was 25 percent and middle market loan growth was 24 percent. Consumer loans continued with its trajectory, growing 49 percent. Consumer loans account for 16 percent of total loans, up from 13 percent in 2016. Deposits grew 19 percent, with lowcost deposits growing 18 percent. Net interest margin improved to 3.3 percent in the fourth quarter of 2017 from 3.2 percent of previous quarter and 3.1 percent a year ago.

Asset quality remained healthy with net nonperforming loan ratio (NPL) at 0.02 percent at yearend 2017, an improvement from 0.11 percent of third quarter 2017. Provision for credit losses during the year was P656 million. NPL reserve cover increased to 239 percent at year-end 2017 from 220 percent of previous quarter.

The cost-to-income ratio was 49.8 percent. Operating expense growth, excluding provisions for credit and impairment losses, was 19 percent due to higher gross receipts taxes, a 14 percent growth in manpower cost, and a 48 percent increase in depreciation, amortization and software costs. Security Bank has been supporting the growth of its retail banking and core businesses with investments in manpower, digital platform, major I.T. upgrade and 13 new branches opened during the year. The Bank has 303 branches and 713 ATMs at year-end 2017.

Total assets grew 9 percent to P756 billion. Shareholders’ capital was P105 billion, up 8 percent. Return on average shareholders’ equity was 10.2 percent. Return on average assets was 1.5 percent. Capital adequacy ratios were healthy, with Common Equity Tier 1 ratio at 15.5 percent and Total Capital Adequacy Ratio at 17.7 percent. The book value per share was P139.31 as of December 31, 2017, up 8 percent from year-ago level. During the year, Security Bank paid cash dividends of P3.00 per common share, an increase from P2.00 per common share in 2016.