Larger loan buffer gnaws on Security Bank’s profit

MANILA  -Security Bank’s first quarter net income dropped 11 percent to P2.4 billion amid a sharp increase in credit provisioning.

This comes despite a 6-percent increase in revenue to P9.8 billion as the lender expanded net loans by 5 percent to P490 billion, driven by home lending and other retail loans, a stock exchange filing showed on Friday.

Thus, net interest income grew 7 percent to P7.5 billion while non-interest income added 2 percent to P2.3 billion due to higher service charges, fees and commissions.

Provisions for credit losses, however, surged to P616 million from P80 million in the first quarter of 2022.

Security Bank said asset quality showed improvement as its gross non-performing loan (NPL) ratio eased to 3.12 percent versus 3.65 percent a year ago. Nevertheless, the lender took a more conservative approach and increased its NPL reserve cover to 99 percent from 90 percent last year.

Apart from credit expenses, operating costs rose 12 percent, “driven by investments in manpower and technology.”

“We are making significant investments in our team and our technology to support our clients and meet our medium-term goals by enhancing our data and technology infrastructure, strengthening cybersecurity, and tactically expanding our branch network,” Security Bank president and CEO Sanjiv Vohra said in a statement on Friday.

—Miguel R. Camus