Security Bank net profit up 29% in first 6 months

Security Bank grew its first-semester net profit by 29 percent year-on-year to P4.66 billion as extraordinary trading gains added to stable earnings from core businesses.

This translated to an annualized return on equity of 19 percent, the bank told the Philippine Stock Exchange yesterday.

For the second quarter, the bank’s net profit fell 40 percent year-on-year to P1.3 billion. Net interest income during the quarter was P2.9 billion, about 4-percent lower than the level in the same period last year but up 1 percent quarter-on-quarter. Non-interest income for the second quarter was P998 million, which included trading gains of P315 million.

On core business for the first six months, the bank expanded its loan book by 20 percent year-on-year to P207 billion, which was supported by an 18-percent growth in deposit base to P257 billion.

Loan-to-deposit ratio stood at 81 percent as the bank converted more of its deposits into earning assets. Loan growth was seen broad-based, with corporate and commercial loans rising 18 percent and consumer lending surging 90 percent year-on-year in the first semester, the bank said. In the last few years, the bank has moved to aggressively expand its retail banking operations.

Net interest income for the semester was flat at P5.8 billion versus the level in the previous year. While total interest income expanded by 11 percent, interest expense grew at a faster 46 percent year-on-year. Net margin for the semester slightly narrowed to 3.2 percent compared to 3.4 percent in the same period last year.

Non-interest income rose 69 percent year-on-year to P4.4 billion, which included an extraordinary trading gain of P2.1 billion. Excluding such extraordinary gain, non-interest income was up 58 percent year-on-year to P2.3 billion. Meanwhile, fee-based income inclusive of asset management was 11 percent higher year-on-year at P947 million.

For the six-month period, Security Bank’s total operating income increased by 22 percent year-on-year to P10.2 billion while operating expense—excluding provisions for credit losses and impairments—grew by 28 percent due to taxes incurred from the sale of securities in the first quarter alongside marketing and advertising expenses in support of the bank’s retail banking strategy.

Security Bank president and chief executive Alfonso Salcedo Jr. said: “We are focused on the execution of our strategy aimed at growing our retail banking business into a strong third pillar complementing our strengths in wholesale banking and financial markets businesses. Retail banking is a steady-growth, sustainable and higher margin business, which is less volatile than cyclical businesses.”