Security Bank Q1 net profit up 11%

Security Bank Corp. grew its first-quarter net profit by 11 percent year on year to P1.2 billion as steady interest earnings were complemented by a triple-digit rise in revenues from non-interest income.

This translated to a return on equity of 13 percent, the bank said in a statement issued last Friday.

Security Bank president Alberto Villarosa said: “Our business results as well as the execution of our business expansion strategy are on track with our objectives. The bank is well positioned to service the requirements of our customers and key sectors of the economy during this exciting period for our country ushered in by its rating upgrade to investment grade by Fitch Ratings and Standard and Poor’s. The Philippines broke through a critical rating level and this opens up the country to new investment opportunities.”

The bank’s total assets grew by 20 percent year-on-year in the first quarter to P258.9 billion, with its loan book expanding by 21 percent to P119.2 billion. Its loan book went to critical sectors such as power, utilities, infrastructure, wholesale and retail trade, food, agriculture and consumer goods “in support of economic development.”

Deposits likewise grew by 22 percent to P141.8 billion, which matched the pace of loan growth.

The bank’s revenues for the first quarter of 2013 grew by 31 percent year-on-year to P3.1 billion. This was boosted by non-interest income, which increased by 230 percent to P1.1 billion, attributed mainly to fees and other income-generating core activities. Service charges, fees and commissions grew by 60 percent, driven by capital markets, stockbrokerage, deposits and loan fees, while trust income increased by 22 percent.

On the other hand, the bank said its net interest income from the interest differential business was steady at P2 billion. “The net interest margin was lower at 3.6 percent from 4 percent a year ago as market interest rates continued to decline, precipitated by the 165-basis-point reduction in the interest rate for the special deposit account of the Bangko Sentral ng Pilipinas (BSP) over the year,” the bank said.

On the expenditure side, operating costs excluding provisions for credit losses and impairments increased by 45 percent year-on-year to P1.7 billion due to its branch network expansion. As of the end-March, the bank had 210 branches, of which the universal bank had 172 branches while thrift bank subsidiary Security Bank Savings had 38 branches.

Manpower compensation increased due to a higher head count, as did occupancy costs, depreciation and amortization and other branch expansion-related cost items. The cost-to-income ratio was 54 percent, which meant that the bank spent 54 centavos to earn every peso.

“Our operating expenses and cost-to-income ratio reflect the impact of our investments in branch expansion. Cost discipline remains a priority and we aspire to maintain the favorable cost-to-income ratio comparisons relative to industry benchmarks,” said Security Bank chief financial officer Joselito Mape said.

Mape noted that the bank’s asset quality remained strong with the non-performing loan (NPL) ratio at 0.69 percent of total loans, lower than the 1.2 percent a year ago. NPL ratio based on the new Bangko Sentral definition was at 0.05 percent, he said, adding that the bank’s reserve cover was at 218 percent. Doris C. Dumlao