Security Bank posts record profit of P8.5B
Security Bank grew its net profit last year by 11 percent to P8.55 billion, the highest in its 65-year history, as strong core revenue made up for the slack in treasury gains.
For the fourth quarter alone, Security Bank’s net income rose by 18 percent to P1.9 billion, driven by a 30-percent increase in net interest income to P4.4 billion, the bank told the Philippine Stock Exchange Wednesday.
“We are pleased with the quality of our earnings. Our 2016 results show steady progress in our core recurring income. The growth in our net interest income more than offset the lower trading gains,” Security Bank president and chief executive officer Alfonso L. Salcedo Jr. said in a statement.
“Notably, the growth of our net interest income has accelerated to 30 percent year-on-year in fourth quarter 2016 from 28 percent in previous quarters. Our loans and deposits are growing robustly. Our asset quality and cost-to-income are in good shape. We continue to invest in growing the business,” he said.
For the full year, Security Bank’s net interest income increased by 28 percent to P15.9 billion, offsetting the P1.1-billion decline in trading gains. Net interest margin was steady at 3.1 percent.
Gains on sale of securities fell to P1.8 billion from P2.9 billion in the previous year.
Total loans and investments in corporate bonds increased by 25 percent to P317 billion. Corporate, commercial and retail customer loans rose by 20 percent to P289 billion.
Retail loans now account for 13 percent of the bank’s total loan portfolio, up from 10 percent in 2015. The bank is developing the retail business as a new growth segment.
Consumer loans rose by 56 percent. Credit card receivables declined by 5 percent due to the sale of the Diners Club franchise to BDO Unibank.
The bank’s total assets increased by 31 percent to P695 billion.
On the funding side, deposits expanded by 20 percent to P347 billion, with low-cost deposits increasing by 20 percent.
On asset quality, net non-performing loan (NPL) ratio was at 0.44 percent, among the lowest in the industry. NPL reserve cover stood at 170 percent.
Notwithstanding the healthy asset quality, Security Bank increased its provision for probable credit losses by 52 percent to P953 million.
The cost-to-income ratio was 50 percent. Operating expenses—excluding provisions for probable credit losses and impairments—grew by 11 percent as the bank continued to invest to support growth in business, making major investments in information technology, people and branches.
“Shareholders’ capital increased 83 percent to P97 billion from P53 billion a year ago as a result of the P37 billion in capital investment by The Bank of Tokyo-Mitsubishi UFJ Ltd. (BTMU) and retained earnings. Security Bank is currently among the country’s five largest private domestic universal banks by capital. Due to our larger capital resulting from BTMU’s investment, our return on shareholders’ equity is 10.4 percent and our return on assets is 1.4 percent in 2016. Our common equity tier 1 ratio is at 18 percent and total capital adequacy ratio (CAR) is at 20.5 percent, well above the regulatory minimum of 8.5 percent and 10 percent, respectively,” said Security Bank chief financial officer Joselito Mape.
