Security Bank sees healthy ROE
Security Bank Corp. expects to maintain a healthy return on equity (ROE) this year even as its capital base expands, making it harder to sustain higher profit margins.
At the company’s annual shareholders’ meeting on Tuesday, bank president Alberto Villarosa said growth for the year would come from the expansion of its mid-market and corporate lending businesses as well as the strengthening of the group’s consumer segment.
“We’re looking at a 15- to 20-percent growth in loans, driven by the mid-market lending and our corporate lending. We’re also looking at a 15-percent growth in deposits,” he told reporters at the meeting’s sidelines.
“For ROE, we are seeing about 17 to 18 percent,” Villarosa said. This would be lower than the 24.6-percent ROE the company booked in 2011, translating to a net income of P6.7 billion. The company said it benefited from likely non-recurring gains due to profits from its trading and treasury business.
Villarosa said the thinning of the bank’s ROE would be a result of the company’s capital base. “The denominator on our ROE has grown so we have to make double time to maintain the same ROE,” Villarosa said.
To support the growth of its lending base, the company said it would issue an additional P5 billion in long-term negotiable certificate of deposits (LTNCD), adding to a similar issuance of the same amount last year.
“We are now just waiting for the timing,” Villarosa said, adding that the country’s debt market was currently flooded with debt securities.
“There are lots of offers. Globe (Telecom Inc.) will issue bonds, (Filinvest Land Inc.) will issue, and BDO (Unibank Inc.) just announced a $1 billion rights offer,” he said. The additional LTNCDs, he said, would boost the company’s deposit base and help grow its loan portfolio.
Security Bank also plans to expand its branch network by an additional 50 locations, bringing the total to about 250, mostly in Metro Manila. At the end of the first quarter, Security Bank reported a 20-percent increase in its loan portfolio to P99 billion and a 22-percent increase in its net interest income to P2 billion compared with the same period last year.
The company said this reflected “the bank’s focus on driving growth through its core businesses.”
The bank reported a year-on-year increase of 12 percent in its total operating income of P2.3 billion over the same three-month period last year.
