SM Net Income Up 13.6% to PhP14.2B

(PHStocks) – SM Investments Corporation (SM) reported a 13.6% growth in consolidated net income of PhP14.17 billion for the first nine months ended 30 September 2011, compared to PhP12.48 billion last year. SM’s consolidated revenues, on the other hand, grew by 13% to PhP140.10 billion, as compared to PhP124.34 billion in 2010. The sustained robust performance of the company’s core businesses was a key driver of SM’s positive results for the period. The company’s balance sheet remains strong with consolidated net debt to equity ratio at 32 to 68.

SM President Mr. Harley T. Sy said, “SM realized its revenue and income growth objectives due to the consistent achievements attained by its subsidiaries. Our strategy is to focus on our core businesses where we have the necessary expertise to continually expand and deliver value for all our stakeholders. We intend to maintain this approach in the last quarter of 2011, which is traditionally our strongest period.”

Net Income Profile

Among SM’s core businesses, banks contributed the most at 31.3% to the company’s consolidated net income. This was followed by retail and shopping malls with 28.1% and 23.0%, respectively. SM’s real property accounted for 17.6%.

BANKING

Banco De Oro Unibank, Inc. (BDO)

BDO reported a net income of PhP7.60 billion for the first nine months of 2011, up 19% compared to PhP6.40 billion last year. BDO’s gross customer loans grew 24% to PhP620.80 billion, while total deposits increased 15% to PhP820.60 billion. Recurring fee-based income rose 17% to PhP8.80 billion.

Operating expenses grew moderately at 5% to PhP27.00 billion. BDO’s non-performing loan (NPL) ratio dipped to 3.9% from 4.7% as of year-end 2010. The bank’s capital adequacy ratio (CAR) rose to 15%, following the PhP8.50 billion Tier 2 issue in June 2011. BDO issued an additional PhP6.50 billion worth of Tier 2 Notes in October 2011 to further supplement the bank’s capital position and complete its PhP15.00 billion capital program.

China Banking Corporation (China Bank)

China Bank recorded a net income of PhP3.38 billion for January to September 2011, which is 7.55% lower from last year. Return on equity (ROE) was at 14%. The bank’s loans increased 21% to PhP127.91 billion. Net interest income grew by 1.2% to PhP6.44 billion, while other income improved 3.6% to PhP1.62 billion.

China Bank’s asset base grew 2.5% to PhP237.89 billion and deposits rose 2.8% to PhP194.49 billion. Non-performing loan (NPL) ratio improved to 3.14% from 4.35%, with loan loss reserve coverage of 145.8%. Total capital funds reached PhP37.03 billion. Capital adequacy ratio (CAR) stood at 16.51%.

RETAIL OPERATIONS

SM Retail reported a net income growth of 12% for the first nine months of 2011 to PhP3.95 billion from PhP3.55 billion last year. Total sales amounted to PhP101.90 billion for a 10% increase over that of last year.

SM Retail has opened 24 new stores so far this year, bringing its total number of stores to 163. To date it has 41 department stores, 32 supermarkets, 58 Savemore branches, 28 hypermarkets, and four Makro outlets. The group intends to open more stores until the end of this year.

MALL OPERATIONS

SM Prime Holdings, Inc. (SM Prime) reported a 14% increase in consolidated net income for the first nine months of 2011, amounting to PhP6.41 billion from PhP5.62 billion in the same period in 2010. Consolidated revenues also grew 13% to PhP19.27 billion, compared with PhP17.03 billion last year.

The company’s better than expected results is attributable to its expansion program, which last year added 289,000 square meters (sqm) in net leasable space. The four new SM malls that opened last year are SM City Calamba, SM City Novaliches, SM City Tarlac, and SM City San Pablo. These four new malls added a full year of operations this year.

Consolidated rental income contributed 85% to total revenues, and grew by 15% to PhP16.45 billion. The increase in revenues came from both the additional space and the growth of same store rental. Cinema ticket sales amounted to PhP2.07 billion, compared to PhP2.04 billion last year.

Operating expenses rose 12% to PhP9.12 billion from PhP8.14 billion last year. Income from operations increased to PhP10.14 billion, up 14% from PhP8.89 billion in 2010.

REAL PROPERTY

SM Development Corporation (SMDC) realized a consolidated net income of PhP3.10 billion from January to September 2011, which is 51% higher compared to PhP2.10 billion last year. Consolidated revenues increased 72% to PhP11.85 billion as against PhP6.90 billion in 2010.

The company’s net income from real estate operations reached PhP3.00 billion, 91% higher from last year’s PhP1.60 billion. Revenues, on the other hand, rose 86% to PhP11.3 billion from PhP6.1 billion in 2010.

Strong sales of SMDC’s residential condominium projects and on-track construction completion rates contributed significantly to the company’s positive results. From January to September this year, SMDC sold about 7,900 residential units worth approximately PhP17.60 billion.

As of end-September 2011, SMDC has 16 residential projects. For the rest of 2011, two more new residential condominium projects will be launched. In 2012, SMDC is targeting to launch at least five more new projects.

Meanwhile, at the Pico De Loro Cove of Hamilo Coast in Nasugbu, Batangas, the newly opened Pico Sands Hotel attracted numerous guests during the recent long weekends. Amenities include a beach club, a country club, various restaurants, and water sports facilities, among others. In addition, there are currently four residential condominium projects in Pico De Loro.

For further information, please contact:

Ms. Corazon P. Guidote

Vice President for Investor Relations

SM Investments Corporation

E-mail: cora.guidote@sminvestments.com

Tel: +63-2-857-0117

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