Security Bank net profit surged 54% in 9 months

MANILA, Philippines–Security Bank Corp. grew its nine-month net profit by 54 percent year-on-year to P6.43 billion, securing a rare slot among the few local banks that will post higher full-year earnings this year compared to last year.

This translated to a return on equity (ROE) of 20 percent while return on assets stood at 2.3 percent, the bank told the Philippine Stock Exchange (PSE) on Tuesday.

For the three-month period ended September, the bank earned P2.8 billion in net income, up 13 percent year on year.

“All of our business segments sustained strong results in the third quarter. They continue to deliver healthy returns on our investment in branch network expansion in 2012-2013,” Security Bank president and chief executive Alberto Villarosa said.

Net interest income increased by 37 percent year on year to P8.5 billion in the nine-month period. Net interest margin stood at 3.4 percent.

Core revenues—comprising of net interest income, fee-based income and trading gain attributable to customer flows—grew by 27 percent to P10.2 billion. Fee-based income inclusive of asset management was P1.2 billion while overall trading gain was P3.6 billion, the bank reported.

Reflecting growth in its core business, Security Bank expanded its loan book by 25 percent year-on-year to P181 billion while deposits rose 26 percent to P232 billion in the nine-month period. For every peso of deposits generated, the bank lent out 78 centavos.

In the absence of extraordinary trading gains that jacked up most local bank’s earnings to record highs in 2013, many have posted slower earnings this year. In the third quarter, however, most banks posted improvements in trading gains.

Security Bank ended September with total assets of P366 billion, about a third higher than the level in the same period last year.

On the expenditure side, total operating income increased by 41 percent year on year to P13.5 billion in the nine-month period. Operating expense, excluding provision for probable credit losses and impairments, grew by 13 percent. Cost-to-income ratio, a measure of efficiency, was at 42 percent, which meant that for every P1 earned, the bank spent 42 centavos.

For the third quarter alone, the bank generated a net interest income of P2.7 billion. Non-interest income amounted to P2.5 billion while about P1.9 billion in trading gain was realized through the sale of securities. The bank’s investment securities at amortized cost portfolio was pared down to P74 billion as of end-September from P111 billion a quarter ago.

On asset quality, the bank’s bad loans stood at a meager 0.21 percent of total portfolio compared to 0.16 percent a year ago. Nevertheless, the bank earmarked provision for probable credit losses for the first nine months amounting to P784 million. The non-performing loan (NPL) reserve cover increased to 212 percent as of end-September from 193 percent a year ago.