Security Bank’s Q1 profit up 21%

Security Bank Corp. grew its net profit in the first quarter by 21 percent year-on-year to P2.9 billion on higher interest earnings and securities trading gains.

The bank aside P5.7 billion as provisions for credit losses in the first quarter – exceeding the loan loss buffer of P4.2 billion earmarked for the whole of 2019.

In a disclosure to the Philippine Stock Exchange on Tuesday, Security Bank said the much higher provisioning level factored in credit model refinements reflecting the bank’s views on the current environment, headwinds in consumer and commercial lending, and the change in the loan mix towards more consumer loans.

In view of the possible client impact of the COVID-19 pandemic, the bank has initiated portfolio reviews, reassessed its provisioning, and intensified client engagement, the disclosure said.

“We enter this period of challenge arising from the COVID-19 pandemic with a strong balance sheet and healthy liquidity and capital positions. We have the resources to serve our clients, protect our employees, and do our part to support our communities while maintaining the safety and soundness of the bank,” said Security Bank president and chief executive officer Sanjiv Vohra.

The bank’s three-month profit performance translated to an increase in return on equity to 9.8 percent from 8.6 percent a year ago. Return on assets also improved to 1.47 percent from 1.24 percent during the comparative period.

Total revenues increased by 75 percent year-on-year to P13.2 billion in the first three months. Excluding trading gains, total revenues still grew by 41 percent to P9.7 billion.

Three-month total net interest income rose by 41 percent to P8.1 billion on improved margins alongside an increase in lending volume.

The bank expanded its loan book by 14 percent year-on-year to P468 billion. Retail loans grew by 44 percent year-on-year, accounting for 29 percent of total loans. Wholesale or corporate lending book expanded by 6 percent.

Net interest margin in the first quarter improved by 129 basis points to 4.68 percent in the first quarter.

On the other hand, total non-interest income surged by 184 percent to P5.1 billion in the first three months, driven mostly by securities trading gains which soared by 420 percent year-on-year to P3.5 billion.