Screnngrab from www.securitybank.com
MANILA, Philippines — Bucking the downturn experienced by most of its peers, Security Bank grew its first-quarter net profit by 17-percent year-on-year to P1.43 billion on higher interest earnings and improved margins.
The bank’s return on shareholders’ equity was at 13.8 percent and the return on assets was at 1.6 percent, the bank said in a disclosure to the Philippine Stock Exchange on Tuesday.
Security Bank said this profit increase was driven by 42 percent year-on-year growth in net interest income to P2.8 billion, in turn anchored on the expansion in loans and investment securities.
Net interest margin improved to 3.54 percent, about 3.33 percent quarter-on-quarter. Average margin in 2013 was at 3.49 percent.
The bank grew its loan book by 39 percent year-on-year while deposits increased by 49 percent. The loan-to-deposit ratio was at 78.8 percent.
The investment securities portfolio increased by 132 percent year-on-year.
Security Bank president and chief executive officer Alberto Villarosa said: “Our core businesses continue to grow alongside the healthy economy. Our net margin has improved and our asset quality remains superior. There is healthy demand for the bank’s services across all our customer segments.”
Joselito Mape, Security Bank chief financial officer, added: “Our cost efficiency is improving, with cost-to-income ratio at 48 percent in first quarter 2014 from 55 percent in 2013. We made major investments in branch network and retail bank expansion in the last two years, which elevated our cost-to-income ratio during that period. Our capital level under Basel 3 is healthy, with tier 1 CAR (capital adequacy ratio) at 13.5 percent and total CAR at 14 percent.”
The Basel 3 framework introduces a complex package of reforms designed to improve the ability of banks to absorb losses. It also extends the coverage of financial risks and puts in place stronger firewalls against periods of stress.
Non-interest income contributed P790 million in the first three months. Fees and commissions stood at P361 million while trading gains amounted to P320 million.
Security Bank’s total operating income increased by 17 percent year-on-year while operating cost – excluding provisions for credit losses and impairments – grew by 4.1 percent. Pre-provision-and-impairment income was at P1.84 billion, representing a 32 percent year-on-year increase. The bank set aside P133 million in credit provisions.
Security Bank’s non-performing loan ratio was at a meager 0.06 percent in the first quarter, further down from 0.11 percent at yearend 2013 – among the lowest in the banking industry.
NPL reserve cover was at 198 percent, up from 195 percent last yearend, which was among the highest in the industry.
Total resources increased by 46 percent year-on-year to P377 billion as of end-March 31.
Meanwhile, Security Bank plans to issue Basel 3-compliant Tier 2 bonds, citing the need to “tap into value-adding opportunities in the market and fuel the bank’s growth.”
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