Security Bank posts P2.35B profit in Q1

Security Bank Corporation (PSE: SECB) posted P2.35 billion in net income in the first quarter of 2018. This is 16.6 percent or P468 million lower than year-ago level primarily due to the decrease in trading gains by 50 percent or P416 million and the increase in provision for income tax by P311 million.

Core revenues — comprising of net interest income, fee-based income, and trading gains attributable to customer flows — were up by 15 percent or P797 million. Net interest income grew by 13 percent to P5 billion.

The underlying customer business remained strong, with net interest income from customer loans and deposits increasing by 43 percent to P3.6 billion. Interest income from financial investments decreased as the Bank reduced its securities portfolio by 11 percent year-on-year through securities sale.

Service charges, fees and commissions grew by 45 percent to P683 million. The growth in fee income was broad-based, led by bancassurance, credit card and loan fees.

Loans grew by 20 percent yearon-year to P367 billion. Corporate loan growth was 16 percent and middle market loan growth was 13 percent. Consumer loan growth accelerated to 54 percent year-on-year.

With the roll-out of Small Business Loans and Personal Loans in early 2017, Security Bank now has a full plate of consumer loan products consisting of home, auto, credit card, personal and small business loans, which helped net interest margin to be sustained at 3.3 percent in Q12018. This is higher than the 3.1 percent a year ago and same level as quarter ago. Consumer loans as a percent of total loans increased to 17 percent.

Deposits grew by 11 percent yearon-year to P420 billion. Low-cost deposits increased by 20 percent. Total assets stood at P703 billion. Asset quality remained healthy, with gross non-performing loan (NPL) ratio at 0.7 percent, lower than the 0.9 percent a year ago and same level as quarter ago. The net NPL ratio was 0.27 percent. The NPL reserve cover increased to 269 percent.

Cost-to-income ratio was 53 percent. Operating expense growth was 14 percent, excluding provisions for credit and impairment losses. The Bank’s manpower is now bigger — 5,500 in Q12018, up by 500 from January 2017 level — supporting the growth in consumer finance, branches, digitalization and information technology transformation to serve the Bank’s client base better.

Security Bank’s capital position was stronger, with Common Equity Tier 1 Ratio at 16.5 percent and Total Capital Adequacy Ratio at 18.8 percent, an improvement from 15.5 percent and 17.7 percent, respectively, in the previous quarter. Security Bank continued to be the best capitalized bank with the highest capital adequacy ratios among the top ten private domestic universal banks in the country by total assets. Return on shareholders’ equity was 8.9 percent. Shareholders’ capital was P106 billion, up by 6 percent from year ago level.