Security Bank focuses on growing retail banking unit

MANILA, Philippines—Security Bank Corp. (SBC) has mapped out an aggressive plan to make its retail banking operations a formidable new leg that would account for about a third of total business within the next five years.

By developing its retail banking business into another major growth engine in the future, SBC seeks to diversify its income stream and unlock higher margins.

This is the “culmination of a 10-year roadmap” that had allowed SBC to establish a strong presence in wholesale and middle-market banking as well as treasury businesses, bank president Albert Villarosa said in a briefing yesterday.

“It’s opportune for us to establish a serious presence in retail banking,” Villarosa said.

The expansion into the retail business targets the “emerging mass affluent” market, or consumers with household income of about P50,000 a month of P600,000 a year. “That (segment) comprises about 10 percent of the total population and these are the people who are starting to build their lives and are building homes and buying cars,” said SBC executive vice president for retail banking Ma. Cristina Tingson.

To account for 25 to 30 percent of the bank’s total business in the future, Tingson said the retail loan portfolio must grow to about 40 percent of the bank’s total lending. At present, this segment accounts for only less than 10 percent of the portfolio.

In 2013, SBC grew its loan portfolio by 38 percent to end the year at P165 billion.

Coming into this business aggressively now allows SBC to capture what could be an “exponential” growth opportunity in Philippine consumer lending while allowing SBC to learn from history of other banks that had taken this path earlier, said SBC executive vice president Rafael Algarra.

“We don’t intend the retail bank to be a bank for everybody,” Villarosa said, adding that this strategy would not require an aggressive expansion in SBC’s distribution network.

Villarosa noted that six to seven years ago, SBC had only 117 branches. This has more than doubled to 244 branches, including the branches of its thrift banking arm. “We believe we are near the optimum number of branches we need to serve the target market,” he said.

This year, SBC targets to put up 24 branches. In the succeeding years, however, it will likely open only 10 new branches per year.—Doris C. Dumlao