Security Bank profit sank 64% to P1B in Q3 as pandemic bites

Security Bank suffered a 63.9-percent year-on-year drop in third quarter net profit to P1 billion as the lender jacked up provisions for probable credit losses amid the prolonged coronavirus pandemic.

This brought the bank’s nine-month net profit to P6.7 billion, down by 12.9 percent year-on-year, based on a regulatory filing.

For the third quarter alone, Security Bank set aside P10 billion in additional loan loss buffer, surging from only P1.1 billion in the same period last year. This brought nine-month loan loss provisions to P21.1 billion, a dozen times larger than the buffer in the same period last year.

With this provisioning level, the bank has set aside P1.22 centavos for every peso of bad loans.

Citing challenges arising from the pandemic and the resulting economic impact, Security Bank’s bad loans rose to 4.03 percent of total loans at end-September from 1.58 percent at end-June.

“While revenues, margins and capital are resilient, the bank has maintained proactive credit provisioning given economic challenges arising from the pandemic. We are prudently supporting our clients, continuing vigilance in managing risks, and investing in initiatives to fortify our services,” Security Bank president and chief executive officer Sanjiv Vohra said.

Before provisioning expense, the bank’s operating profit soared by 120 percent year-on-year to P24.8 billion in the first nine months on higher interest earnings and trading gains. For the third quarter alone, preprovisioning operating profit also surged by 120 percent year-on-year to P9.2 billion.

Security Bank spent only 38.4 centavos to earn every peso in the first nine months, more efficient than the 53.3 centavos it spent to earn every peso a year ago.

Total net interest income for the nine-month period grew by 24 percent year-on-year to P23.4 billion. For the third quarter, total net interest income increased by 8 percent year-on-year to P7.6 billion.

The bank’s net interest margin rose by 88 basis points year-on-year and by 26 basis points quarter-on-quarter to 4.9 percent in the third quarter.

Total loans stood at P431 billion, down by 3 percent year-on-year and 4 percent quarter-on-quarter. Retail loans were up 2 percent year-on-year, comprising 26 percent of total loans. Wholesale loans were flat compared to the year-ago level.

On the other hand, nine-month service charges, fees and commissions fell by 10 percent year-on-year to P2.6 billion.

—DORIS DUMLAO-ABADILLA