Security Bank starts P 5-B bond offering

Dy family-led Security Bank launched yesterday a new P5-billion local bond offering, locking in longer-term funding especially now that interest rates had gone down significantly.

The bonds will have a tenor of two years and will carry a fixed rate of 3.125 percent a year, Security Bank disclosed to the Philippine Stock Exchange.

The offering—which allows the bank to diversify its funding base while boosting its lending capacity—may be upsized depending on demand.

The public offer period will run from June 23 to July 15 this year. Minimum denominations have been set for one million pesos and increments of P100,000 thereafter.

Security Bank plans to list the bonds on the Philippine Dealing and Exchange Corp. on July 24, to provide secondary market liquidity to investors who may opt to trade the instruments.

The bonds will be issued out of Security Bank’s P100-billion bond and commercial paper program that was established in December 2018. The program started with P50 billion and had been doubled as approved by the bank’s board of directors.

Philippine Commercial Capital Inc. (PCCI) was mandated as sole bookrunner. PCCI and SB Capital Investment Corp. are the joint lead arrangers and selling agents for this issuance.

Established in 1951, Security Bank is among the six largest private domestic universal banks in the Philippines by total assets, which amounted to P784.4 billion as of end-March. The bank had a total of 309 branches and 839 automated teller machines as of end-March.

The bank grew its net profit in the first quarter by 21 percent year-on-year to P2.9 billion on higher interest earnings and securities trading gains. It set aside P5.7 billion as provisions for credit losses in the first quarter—exceeding the loan loss buffer of P4.2 billion earmarked for the whole of 2019.

Security Bank’s three-month net profit performance translated to an increase in return on equity to 9.8 percent from 8.6 percent a year ago. Return on assets also improved to 1.47 percent from 1.24 percent during the comparative period.

The bank expanded its loan book by 14 percent year-on-year to P468 billion. Retail loans grew by 44 percent year-on-year, accounting for 29 percent of total loans. Wholesale or corporate lending book expanded by 6 percent. INQ