Bank Q3 profit up 22%
FOR THE July 1 to September 30, 2019 period, Security Bank Corporation (PSE: SECB) posted Php 2.7 billion in net income, up 22% versus year-ago level. Total revenues grew 35% yearon-year to Php 8.8 billion. The growth in revenues was driven by core business income. Net interest income from customer loans and deposits/peso bond issuance increased
year-on-year to Php 5.9 billion. Key to this growth was the continued expansion of retail loans and low-cost deposits, and disciplined pricing in wholesale loans. Retail loans increased 54% year-on-year. Retail loans now account for 27% of total loans versus 19% a year ago. Total net interest income grew 33% to Php 7 billion.
Total loans grew 11% year-on-year to Php 444 billion. Total deposits grew 4% to Php 487 billion. Total deposits and peso bond issuance combined grew 8% to Php 504 billion. On September 23, 2019, the Bank raised Php 6 billion in Long-Term Negotiable Certificates of Deposit (LTNCD) with a tenor of 5 ½ years, in line with its efforts to tap cost-efficient funding source alternatives to short-term high-cost deposits, as well as to diversify its funding base. Net interest spread on loans and deposits/peso bond issuance was 5.92% in Q3-2019, up 57 basis points quarter-on-quarter and 149 basis points year-onyear. Net interest margin increased to 4.05% in Q32019, up 47 basis points quarter-on-quarter and 77 basis points year-on-year.
Service charges, fees and commissions increased 44% to Php 1 billion. This was driven by credit cards, loan fees, deposit charges, bancassurance and stock brokerage. Securities trading gains in Q3-2019 amounted to Php 369 million. Total non-interest income increased 43% to Php 1.8 billion.
For the January 1 to September 30, 2019 period, net income was Php 7.7 billion, up 18% from year-ago level. Net interest income from customer loans and deposits/peso bond issuance rose by 41% to Php 15.9 billion. Interest income from financial investments increased by 7% to Php 7.8 billion. Total net interest income grew 23% to Php 18.9 billion. Service charges, fees and commissions for the ninemonth period increased by 45% to Php 2.9 billion. Securities trading gains totaled Php 1.4 billion. Total revenues amounted to Php 24.2 billion, up 29%.
Income before provision for credit losses and income tax in the nine-month period was Php 11.3 billion, up 31% versus year-ago level. Income before provision for credit losses and income tax in Q3-2019 was Php 4.2 billion, up 38% year-on-year.
Cost-to-income ratio was 53.3% despite operating expense in the first nine months growing by 27% year-on-year (excluding provisions for credit and impairment losses) mainly due to gross receipts and documentary stamp taxes (GRT and DST), followed by manpower costs to support growth of the retail banking business. Excluding GRT and DST, operating expense grew by 17% and cost-to-income ratio was 43.9%.
Asset quality remained healthy, with gross nonperforming loan ratio at 1.4%, lower than industry’s 1.7% as of August 2019. Under the new BSP regulations implemented last year requiring Expected Credit Loss (ECL) provisioning by banks, the Bank set aside Php 1.1 billion for provision for credit losses in Q3-2019. This brought provision for credit losses in the ninemonth period to Php 1.75 billion. NPL reserve cover was 110%. Inclusive of reserves in Retained Earnings, NPL reserve cover was 146%.