Security Bank reported a 66-percent decline in first semester net profit to P1.7 billion compared to the level in the same period last year when earnings were boosted by extraordinary trading gains.
However, Security Bank president Alberto Villarosa said the bank was focused on growing its core business founded on solid balance sheet, noting that core revenues rose by 6 percent year-on-year to P5.3 billion in the first semester.
“Our bottom-line in the first half of this year reflected the non-recurrence of a large non-core income from sale of investment securities that we had in the same period of last year, the margin squeeze, and our investing for the future to grow core recurring revenues and add new ones,” Villarosa said in a press statement.
Net interest income was steady at P4 billion as net interest margin declined to 3.5 percent compared to 4 percent in the previous period, reflecting the country’s highly liquid financial system that, in turn, resulted in cutthroat competition among lenders. Volume growth, however, compensated for the margin squeeze.
Loans grew 21 percent year-on-year to P133 billion as the bank supported power, utilities, infrastructure, wholesale and retail trade, food and agriculture, consumer goods and other key sectors of the economy.
Non-interest income declined to P1.3 billion from to P4.2 billion a year ago due to a lower securities trading gain of P279 million against the P3.2 billion the previous year. Unlike most of its peers which booked hefty trading gains this year, Security Bank locked up gains from investment securities last year, citing the need to fund its growing lending business.
Meanwhile, service charges, fees and commissions grew 14 percent year-on-year to P746 million from the year-ago level. Operating costs, excluding provisions for credit losses and impairments, increased 16 percent year-on-year, reflecting the impact of the bank’s investments in business expansion. The cost-to-income ratio was 63 percent for the period.
“As we prudently grow the business, we are focused on our strategic goals of serving our customers well and continuing to be conservative in our lending decisions to ensure sustainable shareholder value over the long term,” Villarosa said.
Total assets reached P294 billion, up 25 percent year-on-year. This was partly funded by a 37-percent rise in deposits to P179 billion. Low-cost deposits likewise increased by 37 percent.