Security Bank’s P20-B offer gets BSP nod

Key lender Security Bank Corp. has obtained approval from the Bangko Sentral ng Pilipinas (BSP) to raise as much as P20 billion from an offering of high-yield deposits.

These long-term negotiable certificates of time deposits (LTNCTDs) will be offered in multiple tranches, the bank said in a disclosure to the Philippine Stock Exchange on Tuesday.

The bank’s offering comes at a time when the BSP is injecting fresh liquidity into the financial system through a
reduction in the reserve requirement and overnight borrowing rate.

LTNCTDs are issued by banks. They usually have higher yields compared to regular time deposits or savings accounts.

Unlike regular time deposits, LTNCTDs cannot be preterminated by holders. However, investors can negotiate or transfer their holdings in the secondary market prior to maturity. Interest on LTNCTDs is tax-free for individual investors if the instrument is in the name of the individual holder and is held for at least five years.

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

The bank is seen to benefit from the strong growth of retail lending, a recovery in treasury gains now that interest rates are on a decline and the projected decline in financial intermediation costs as the
BSP trims the reserve requirement ratio, outgoing Security Bank president Alfonso Salcedo had 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 slower trading gains and higher 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.