Security Bank loans up by 29% in first 6 months

MANILA, Philippines—Security Bank Corp. grew its loan book by 29 percent in the first six months from a year ago, buoyed by demand from large corporations and the middle market, the bank chief said.

In an interview with the Inquirer, Security Bank president Alberto Villarosa also said the bank’s second-quarter results “should be good.”

“The core businesses, we’re doing very well. Our treasury’s also doing very well,” Villarosa said.

In the first quarter, Security Bank grew its core business and enjoyed good margins but the trading business was not within his expectations, Villarosa said.

“In the second quarter, core businesses are good. Margins are still very healthy, although not as high as the first quarter because interest rates have gone down. But also, trading businesses are good,” Villarosa said.

Net interest margin in the first quarter was about 4 percent despite pricing pressure in both corporate and commercial banking segments.

The 29-percent loan growth posted by the bank in the first six months suggested a faster loan disbursement in the second quarter compared to the first quarter. Lending from January to March surged 20.2 percent to P98.6 billion year on year, driven by demand from infrastructure, real estate, mining and energy.

Security Bank has thus grown its earning assets at a faster pace than that of the industry. Based on the latest Bangko Sentral ng Pilipinas data, the commercial banking system grew lending to the real economy by 14.7 percent as of end-May.

Security Bank is raising at least P3 billion from the offering of high-yielding long-term deposits to boost fresh funds for expansion. The bank started selling long-term negotiable certificates of deposit (LTNCDs) with a seven-year tenor last week and the offering will run until August 8. The target issue date is August 15.

Foreign banks Deutsche Bank and Standard Chartered were mandated by Security Bank as lead arrangers for the new offering of LTNCDs, which are like time deposits that have longer maturity and carry higher yields. While they cannot be preterminated like regular time deposits, they are negotiable so they can be sold in the secondary market to other investors. By using the LTNCD structure, which is tax-free because of the long tenor, banks can offer better yields to clients.

The LTNCDs will be issued at par and at a minimum denomination of P10,000. The minimum initial investment size is P50,000.

Early this year, Security Bank raised P5 billion from the issuance of LTNCDs at an interest rate of 5.5 percent a year for a seven-year tenor, the first in local banking history. Most LTNCD offerings by banks in the country have a tenor of a little over five years.