Earnings data, digitalization news lift Security Bank stock

SHARES in Security Bank Corp. moved upward as market players assessed its latest earnings report as well as its partnership with Consolsys, the Malaysia-based automation company that will handle the listed bank’s move to go digital.

Data from the Philippine Stock Exchange (PSE) show Security Bank ranking 17th in value turnover with P556.09 million worth of 5.86 million shares changing hands from Nov. 21 to 25.

The bank’s shares closed at P96 apiece on Friday, up by 4.4% from its Nov. 18 close. For the year, the stock has decreased by 19.3%.

Joylin F. Telagen, research head at IB Gimenez Research Securities, said the stock’s movement was a continuation of its upward trajectory after the bank reported better-than-expected third-quarter and nine-month earnings.

“Coupled by Fed minutes that they might start to slow down the future increases, with possible 50 basis points increase in federal funds rate next month, Dec 13-14,” Ms. Telagen said in an e-mail.

Mercantile Securities Corp. Head Trader Jeff Radley C. See said in a separate e-mail that overall market sentiment pushed the listed bank’s share price higher.

“Last PSE Index rebalancing, SECB was taken out thus dropping to as long as P80,” Mr. See added, referring to Security Bank’s ticker symbol. “SECB is undervalued among the other actively traded banks.”

In July, the PSE announced changes in the composition of the local stock barometer, the PSE index or PSEi. Consunji-led Semirara Mining and Power Corp. replaced the bank in the main index starting on Aug. 8.

Meanwhile, Reuters reported that a “substantial majority” of policy makers at the US Federal Reserve agreed that it would “likely soon be appropriate” to slow the pace of interest rate hikes as debate broadened over the implications of the US central bank’s rapid tightening of monetary policy.

The meeting showed officials were satisfied that they could move rates in smaller, more deliberate steps as the economy adjusted to more expensive credit and concerns about “overshooting” seemed to increase.

Back home, reports last week said Security Bank tapped Consolsys to shift its branch banking management system to a state-of-the-art digital, cloud-based, omnichannel platform.

Under the partnership, the listed bank’s current tellering, lobby management, and signature verification system (SVS) are to be replaced with Mosaic Voyager.

Mosaic Voyager is a cloud-based omnichannel delivery system that reduces inefficiencies, increases overall productivity, and provides an avenue for increased touchpoints.

According to Security Bank, once the system has been fully implemented, the comprehensive and transformative system would enhance its capability to provide a truly differentiated experience for transacting customers, boost operational efficiency, and propel the bank forward in its digital banking transformation.

Ms. Telagen said that fundamentally, the news was taken positively by long-term investors because of its impact on future revenue streams.

However, she cautioned that the risk of stagflation still lingers.

For Mr. See, market players took the news positively.

“Very positive news as there are updates on their company and an institution wants to have more stake in their company,” he said.

Security Bank reported around a 34% increase in its attributable net income to P2.31 billion in the third quarter from P1.72 billion in the same period in 2021. Gross revenues grew by 11.5% to P10.18 billion from P9.13 billion in the same period last year.

The quarterly growth brought its nine-month attributable net income to P8.56 billion, up by 77% from P4.83 billion a year ago. Revenues climbed by 7.1% to P29.41 billion from P27.47 billion previously.

Ms. Telagen sees the bank’s earnings for the fourth quarter to reach P2 billion and expects attributable net income for the entire year to hit P10 billion.

She added the earnings expectations would depend on whether market players would consider investing or trading in the listed bank.

On a technical note, she said the bank had broken a long-term uptrend and is now on a downtrend. She added that “it’s much better to wait a bit and buy when it’s back to its long-term uptrend or breakout from the current downtrend. Trade or invest cautiously.”

Ms. Telagen pegged Security Bank’s support level at P77 while its resistance level at P124.

For Mr. See, the stock is currently trading at overbought levels.

“Investors will be seeing some profit taking possibly next week. Support levels are P93 and P88, while resistance levels are P100 and P104.” — Abigail Marie P. Yraola