Security Bank profit down 4.7% in first 9 mos.

SECURITY Bank Corp.’s net profit dipped by 4.7 percent year-on-year to P6.1 billion in the first nine months due to substantial trading gains booked in the comparative year.

This translated to a 16-percent return on shareholders’ equity, one of the highest among the country’s largest banks as SBC grew its core businesses.

For the third quarter alone, SBC’s net profit declined by 50 percent year-on-year to P1.4 billion likewise due to slower trading gains compared to last year. However, this marked an increase of 8 percent compared to the previous quarter, based on a disclosure to the Philippine Stock Exchange yesterday.

SBC president Alfonso Salcedo Jr said: “We are on track versus our profit target for the year. Our core revenues are growing at a healthy rate and are poised to make up for lower trading gains when interest rates rise. The net interest margin on our customer loans and deposits business has further improved, benefiting from the growth of our consumer and middle-market loans and low-cost deposits.”

The bank grew its loan book in the first nine months by 20 percent year-on-year to P217 billion while deposits expanded by 19 percent to P275 billion. This suggested that for every P1 of deposits generated, it was able to lend out P0.79.

Nine-month corporate or commercial loans grew by 15 percent and consumer loans rose by 81 percent versus last year’s level.

Net interest income in the nine-month period increased by 7 percent year-on-year to P9 billion. Overall net interest margin was maintained at 3.2 percent during the period.

Fee-based income increased by 48 percent year-on-year to P1.8 billion with contribution from the start-up bancassurance business.

Core revenue, composed of net interest income, fee-based income, and trading gain attributable to customer flows, grew by 13 percent year-on-year to P11.5 billion in the first nine months.

Overall trading gain amounted to P2.9 billion during the period. In the same period last year, trading and security gain plus trading gain on investments grew by 74.6 percent year-on-year to P3.6 billion with the disposal of certain dollar bonds to boost capital position in view of the significant increase in the industry’s capital requirement for real estate exposures and unanticipated capital expenditure.

Operating expense growth in the nine-month period, excluding provision for probable credit losses and impairments, rose by 22 percent year-on-year in the first nine months.

In terms of asset quality, net non-performing loan (NPL) ratio stood at 0.31 percent as of end-September compared to 0.21 percent a year ago. The NPL reserve cover was at 179 percent.

SBC chief financial officer Joselito Mape said: “Shareholders’ capital increased by 14 percent year-on-year to P52 billion due to retained earnings. We continue to efficiently use our capital. Our Basel 3 capital adequacy ratios (CAR) are healthy, with common equity tier 1 at 12.7 percent and total CAR at 15.9 percent.”

Basel 3 introduces a complex package of reforms designed to improve the ability of banks to absorb losses. It also extends the coverage of financial risks and have stronger firewalls against periods of stress.