Security Bank Corp. (PSE: SECB) achieved record profits as it reported a net income (unaudited) of PhP7.2 billion for full year 2010. The outstanding performance was 134% higher than full year 2009 and resulted in an industry high return on equity (ROE) of 35%.
Total revenues rose to PhP12.9 billion, 63% higher than the same period last year. The growth in core revenues was significantly enhanced by the PhP4.8 billion in trading and securities gains recorded for the year.
This substantial revenue stream arose from the bank’s efforts to shorten the maturity profile of its fixed income portfolio while seizing the opportunities presented by the pronounced price appreciation of both its Peso and US Dollar ROP portfolio during the fourth quarter of 2010.
Meanwhile, full year 2010 net interest income remained steady at PhP6.1 billion, up 1.6% from the same period last year. This was achieved on the back of a 6.6% increase in the bank’s loan portfolio to close the year at PhP74.5 billion, a slight increase over 2009 as the bank purposely chose to focus on margins rather than solely on market share. Operating expenses, meanwhile, net of provisions for credit and impairment losses stood at PhP4.7 billion, 19.8% higher than the same period last year.
“We clearly surpassed our targets for the year aided by the favorable environment that led to our recognizing the opportunities in the peso and dollar bond markets. The bullishness for emerging market bonds that characterized that last quarter provided added benefits to our efforts at managing the interest rate and duration profile of our existing bond portfolios. We were likewise pleased with the improvements in the other non-interest income components and the ability to preserve net interest margins amidst the rather challenging loan pricing that was prevalent throughout 2010. We attribute these outstanding accomplishments to the commitment, dedication and execution skills of our management and staff,” commented Security Bank President and Chief Executive Officer Alberto S. Villarosa. “Notwithstanding the significant upswing in the one-time trading gains recognized, we are well on track towards ensuring that our customer business segments contribute an equal share in the growth of core revenues without sacrificing our superior asset quality indices.”
Security Bank continues to exhibit industry-best asset quality indices as its non-performing loans (NPL) ratio for the period was at 1.09% while its NPL cover remains unparalleled at 319% at the end of December 2010. In view of the earnings registered for the year, the bank boasts of a fundamentally solid balance sheet as its Capital Adequacy Ratio was at 21.8% at year-end.
The combined performance of revenue and operating expense components enabled robust earnings per share of PhP17.15, higher by PhP8.96 or 109.5% than that recorded at year-end 2009.
These achievements strengthen the bank’s profile amongst local and international peers as it was recently awarded “The Best Managed Company in the Philippines – Small Cap Corporate of the Year” by leading financial magazine, AsiaMoney. A distinguished feat since SECB was the only bank among the awardees from the Philippines with the publication citing its ability to deliver “ROEs well above those of the big banks and generally outperforming them in efficiency ratios.”