Security Bank net profit climbs 5% in 3rd quarter

SECURITY BANK Corp.’s net income grew in the third quarter, reversing the decline it saw in the previous three months, on the back of a surge in consumer loans and deposits.
Security Bank booked a P2.25-billion net income in the July-September period, up 5% from the same quarter last year and 15% higher than its second-quarter profit, it said in a regulatory filing on Monday.
“A key driver for the earnings growth was the continued expansion of the bank’s consumer loans and low-cost deposits. Consumer loans grew 48% year-on-year while low-cost deposits increased 18%,” the statement read.
The bank’s total loans reached P401 billion in the third quarter, 8% higher than the P370 billion recorded in the same period in 2017. It was however slower than the 38% year-on-year loan growth logged in 2017.
The lender said the growth of its wholesale loans slowed to 2% in the third quarter from 36% last year, but would have been 9% if its short-term corporate bridge loan from July to September last year was excluded — which, in turn, could have boosted the bank’s total loan growth to 15%.
Consumer loans accounted for 19% of total loans in the quarter, larger than the 14% share in the same period last year.
Total deposits, on the other hand, stood at P468 billion, up 9% from P431 billion in the third quarter last year. High-cost deposits also grew 3%.
Net interest income from customer loans and deposits for the quarter also grew 23% year-on-year.
Its net interest spread reached 4.43% in the third quarter, 11 basis points (bp) greater than last year, and 16 bps higher than the previous quarter.
The bank’s service charges, fees and commissions went up 38% due to bancassurance, credit card, deposit charges, and loan fees.
Security Bank’s operating expenses for the third quarter excluding provisions for credit and impairment losses grew 13% from last year.
Provisions for income tax, meanwhile, surged 118% “due to growth in income from regular banking unit,” the lender said.
Its net interest margin stood at 3.3% in the third quarter, up seven basis points from a year ago and 11 bps higher from the previous quarter.
In the first nine months of the year, Security Bank recorded a P6.5-billion net income, 11% lower than the year-ago period “primarily due to the decrease in trading gains by 57% or P627 million and the increase in provision for income tax by 73% or P769 million.”
Total net interest income for the January-September period however grew by 7% year-on-year to P15.3 billion.
The bank’s net interest income from loans and deposits also rose 30% to P11.3 billion. Interest income from financial investments, on the other hand, slid 13% “due to a lower level of securities portfolio which decreased by 18% year-on-year.”
Operating expenses in the nine-month period, excluding provisions for credit and impairment losses, likewise grew 13% from last year, putting its cost-to-income ratio at 54%.
The listed lender said its asset quality remained “healthy” as it logged a gross non-performing loan (NPL) ratio of 0.7%, a tad higher than the 0.6% booked as of June. Provisions for credit losses stood at P227 million for the January-September period while its NPL reserve cover was at 120%.
Security Bank’s capital adequacy ratio stood at 18.6% at end-September, steady from last year’s 18.5%, while its common equity Tier 1 ratio in the period was at 16.3%, steady from 16.2% last year.
Return on shareholders’ equity was 8.1%, with the shareholders’ capital growing 6% year-on-year to P109 billion.
The bank’s total assets stood at P733 billion as of end-September.
Security Bank shares closed at P146.10 apiece on Monday, climbing P1.70 or 1.18% from its previous finish. — Elijah Joseph C. Tubayan