Security Bank’s Q1 profit up 135% to P3.36B

SECURITY Bank Corp. posted a 135-percent year-on-year jump in first quarter net profit to P3.36 billion on the back of trading gains and stable interest earnings.

In a press statement on Thursday, SECB said this three-month performance translated to an annualized 28 percent return on equity.

Net interest income grew by a modest 4 percent to P2.9 billion, capped by the anticipated rise in interest expense arising from the issuance of P10 billion Basel 3-compliant Tier 2 capital in July 2014 and $300 million senior unsecured notes issued in January 2015.

Basel 3 framework prescribes a complex package of reforms designed to: improve the ability of banks to absorb losses; extend the coverage of financial risks; and, put in place stronger firewalls against periods of stress.

Amid the increase in interest expense, net interest margin was stable at 3.3 percent for the period, same level as in the previous quarter and versus the 3.4 percent average in 2014.

Core business nevertheless expanded, with the loan book growing by 20 percent year-on-year to P199 billion. On the funding side, deposits went up by 17 percent to P247 billion in the same period. For every P1 of deposits taken by the bank, it has thus turned 81 centavos into earning assets by lending these to the public.

On the other hand, non-interest income increased more than three times year-on-year to P3.4 billion. In particular, the bank booked extraordinary trading gain of P2.1 billion from sale of investment securities. Excluding extraordinary trading gain, non-interest income was P1.4 billion, marking a 72 percent increase year-on-year.

Total assets went up by 8 percent to P409 billion as of end-March. In terms of asset quality, the net non-performing loan ratio stood at 0.08 percent, among the lowest in the banking industry.

“Our core businesses – financial markets, wholesale and retail banking – continued to produce healthy results after a robust 2014 performance. As we focus to deliver the best value to our customers and grow the retail bank as a third pillar to our business, we are greatly pleased to have Mr. Alfonso ’Yogi’ Salcedo Jr. – with his depth and breadth of experience and vision in consumer banking – as our new president and CEO (chief executive officer,” Security Bank chair Alberto Villarosa said.