Security Bank wants to replicate 2017 performance

Security Bank Corp. expects to end this year with net profit nearing the all-time high level of over P10 billion seen back in 2017.

The bank expected to benefit from the strong growth of retail lending, a recovery in treasury gains with interest rates going down and the projected decline in financial intermediation costs as the Bangko Sentral ng Pilipinas trims the reserve requirement ratio, Security Bank president Alfonso Salcedo said in an interview on Wednesday on the sidelines of the bank’s economic forum.

“We expect to outperform last year. We did P2.4 billion (in the first quarter of 2019). Of course you don’t multiply that by four but I think, we can manage because our expenses are front-loaded,” Salcedo said.

“Hopefully, we can manage that better and end up closer to where we were two years ago,” he said.

In 2017, the bank chalked up a record high net profit of P10.26 billion, which declined to P8.6 billion last year due to lower trading gains and provisioning for income taxes.

In the first quarter of 2019, Security Bank’s 1.5-percent year-on-year growth in net profit to P2.4 billion was driven by higher interest earnings and treasury gains.

Retail loans expanded by 49 percent while low-cost deposits increased by 11 percent. Retail loans now accounted for 23 percent of total loans versus 17 percent a year ago.

The bank expanded its loan book by 12 percent year-on-year to P412 billion in the first three months.

Salcedo said the strong performance of the retail lending business would likely continue in the quarters ahead.

“Because (interest) rates potentially will come down, there is better chance to have some treasury trading gains and I think you saw that in first quarter numbers across the industry. So I think it (full-year performance) should be better,” he said.

After its board approved a P50-billion bond program late last year, Salcedo said Security Bank could tap the bond market by end-May. The bank plans to offer in two tranches retail bonds worth about P10 billion in the next six months. —DORIS DUMLAO-ABADILLA