Security Bank posts P6.7B profit

Security Bank Corp. posted a net profit of P6.7 billion last year, 6.4-percent lower compared to 2010 when extraordinary trading gains jacked up its earnings to a record high level.

The bank, however, maintained a very high return on equity of 25 percent and built durable earnings from core lending activities last year. Although its bottom line last year did not replicate the record high level of P7.16 billion in 2010, the bank actually exceeded its internal targets despite the decline in trading gains in 2011.

Total assets expanded 30 percent to P215 billion, boosted by a 24-percent growth in its loan book to P92 billion. Lending activities were spurred by strong credit demand in the top corporate and middle market segments, the bank disclosed to the Philippine Stock Exchange.

With the asset growth from loan and investments, net interest income likewise grew 24 percent to P7.5 billion, translating to a healthy net interest margin of 4.1 percent.

“We clearly surpassed our targets for the year aided by a bullishness that is evident in the renewed investor confidence in the country with unprecedented loan growth not only for our bank but also for the rest of the industry,” said Security Bank president Alberto Villarosa.

“Our full-year performance was likewise enhanced by a favorable emerging bond market as it benefited our efforts at managing the interest rate and duration profile of our investment portfolio,” he added.

Apart from its high returns, the bank also maintained higher operating efficiency than most of its peers. Its cost-to-income ratio stood at 37.4 percent for 2011 based on operating expenses, excluding provisions and impairment losses, amounting to P4.4 billion.

In terms of asset quality, non-performing loans stood at less than 1 percent as a ratio of total loans while reserve cover amounted to 308 percent of soured loans.

The bank’s shares surged 2.6 percent to close at P116.90 a share on Wednesday as the market welcomed its strong operating results for 2011. This gave it a market capitalization of P57.2 billion.

Security Bank’s capital adequacy ratio stood at 20.3 percent, or double the minimum requirement of 10 percent, suggesting ample capacity to increase risk assets.

“The BSP’s (Bangko Sentral ng Pilipinas) consent to our acquisition of Premiere Development Bank and the license to open 50 new branches within the Metro Manila restricted area will usher in an unparalleled growth phase for the bank,” said SBC chief finance officer Joselito Mape. Mape said the bank would remain conscious of growing its franchise “without compromising the discipline we have imposed on our costs as well as our asset quality and credit criteria.”