Security Bank eyes easy access to funds via $1-B medium-term note offering

Security Bank Corp. (SBC), one of the country’s leading banks, has set up a $1-billion medium-term note (MTN) facility, gaining leeway to raise fresh funds for expansion as needed in the future.

In a disclosure to the Philippine Stock Exchange yesterday, SBC said it had mandated foreign banks Citigroup, CLSA, MUFG and UBS as lead arrangers for the MTN program.

“With the establishment of the program, SBC will gain the flexibility to tap the international debt capital markets, subject to market conditions,” SBC said.

The MTN program allows an issuer to have constant cash flows coming in from its debt issuance, typically with tenors of five to 10 years. This allows a company to tailor its borrowings to its financing needs.

These securities can be continuously offered by a company to investors through a dealer, with investors being able to choose from differing maturities. As such, they are different from corporate bonds because they can be offered to investors by the issuer’s agent instead of being underwritten by investment banks and then sold to the public in a tranche.

Based on the bank’s latest financial report, SBC’s capital expenditure commitment covers the following: investments in electronic systems to comply with regulatory requirements such as electronic money laundering monitoring system; investments in other systems such as for credit evaluation; upgrades of existing systems such as telecommunications system; expansion of the electronic banking channels; ATM installations; renovation or relocation of branch premises and, investments in new branches.

SBC posted an 18-percent year-on-year drop in net profit in the first six months amounting to P4.3 billion as trading gains dwindled while tax provisioning increased.

The bank expanded its loan book by 12 percent year-on-year to P383 billion. Consumer loans continued a robust growth of 50 percent and now accounted for 18 percent of total loan portfolio, while wholesale lending picked up by 7 percent from the comparative level last year.

Its common equity tier 1 ratio stood at 16.19 percent of risk assets at end-June while total capital adequacy ratio to risk assets was at 18.46 percent.

Shareholders’ capital was P107 billion, up by 6 percent from the year-ago level. Total assets stood at P722 billion, the sixth largest after BDO Unibank, Metrobank, BPI, Landbank and Philippine National Bank.