Security Bank posts net income of P8.6-B in 2018
Security Bank Corporation (PSE: SECB) posted P8.6 billion in net income in 2018. A key component of the Bank’s earnings is net interest income from customer loans and deposits, which increased by 30% or Php 3.6 billion to P15.7 billion. This was driven by the continued expansion of consumer loans and low-cost deposits. Consumer loans grew 47% while low-cost deposits increased 15%. Consumer loans now account for 20% of total loans versus 16% a year ago.
Total loans increased 12% to P416 billion. Wholesale loan growth was 7%. Total deposits increased 18% to P489 billion. The Bank’s interest margins continued to improve. Net interest spread on loans and deposits further increased to 4.72% in Q4-2018, up by 29 basis points quarter-on-quarter and up by 48 basis points year-on-year.
Interest income from financial investments was lower by 11% or P1.2 billion mainly due to a lower level of investment securities at amortized cost. Total net interest income grew by 7% to P20.8 billion. Overall, net interest margin further improved to 3.4% in Q4-2018, up by 10 basis points quarter-on-quarter and up by 13 basis points year-on-year.
Service charges, fees and commissions increased by 26% to P2.9 billion. This was driven by credit card, bancassurance, loan fees and deposit charges.
The decrease in trading gains by 85% or P2 billion and the increase in provision for income tax by 47% or P790 million primarily accounted for the Bank’s lower net income in 2018. Net income was lower by 16% or Php 1.7 billion versus previous year.
Operating expense growth was 10% (excluding provisions for credit and impairment losses). Cost-to-income ratio was 53.9%.
Asset quality remained healthy, with gross non-performing loan (NPL) ratio at 0.7%. Provision for credit losses was P714 million. NPL reserve cover was 112%, computed using the new BSP Circular 1011 guidelines on loan loss provisions which the Bank adopted in September 2018.
Security Bank continues to be among the country’s best capitalized private domestic universal banks. Common Equity Tier 1 Ratio increased to 16.4% from 15.5% a year ago. Total Capital Adequacy Ratio likewise increased to 18.7% from 17.7%. Return on shareholders’ equity was 8.1%. Shareholders’ capital increased to P109 billion, up 4% year-on-year. Total assets stood at P767 billion, up 10%.
Security Bank has a total of 305 branches and 760 ATMs as of December 31, 2018.
Security Bank is among the six largest private domestic universal banks in the Philippines by total assets (at P767 billion) as of December 31, 2018.