Japan Credit Rating Agency Affirms Security Bank’s A-Investment Grade Credit Rating and Stable Outlook
In its March 29, 2021 release, Japan Credit Rating Agency Ltd (JCR) has affirmed its A-investment grade credit rating with stable outlook on Security Bank Corp. (PSE: SECB). This rating is at the same level as the Philippine sovereign rating.
According to JCR, the rating reflects Security Bank’s relatively robust domestic business base, high profitability and solid capital base. JCR has also incorporated into the rating the synergy effects of Security Bank’s alliance with MUFG Bank.
JCR highlighted that “Security Bank’s financial durability stays strong as indicated by its high loan loss provision coverage ratio and capital adequacy ratio in addition to its high profitability ensured by a high net interest margin”. The Bank kept its provision coverage ratio high at 115% at the end of 2020. JCR also holds that Security Bank’s NPL ratio will continue to be controlled at a manageable level if the economy recovers steadily as the pandemic subsides because the Bank has strengthened its credit management for individual borrowers. Furthermore, the Bank had kept its higher credit costs at a level that can be fully absorbed by its profitability.
Security Bank’s consolidated common equity Tier 1 ratio stood at 19.2% at the end of 2020, one of the highest among major Philippine banks. The Bank’s equity ratio got a boost due partly to a strengthened capital base rendered by MUFG Bank’s equity investment in 2016 and due partly to net income in 2020 and a reduction of risk assets through tighter lending and sale of securities.
“Japan Credit Rating Agency’s affirmation of its credit rating for Security Bank is a testament to our strength as we continue to provide our customers with Better Banking services in these trying times. Our strong capital position is an important pillar which both our customers and employees can rely upon to weather the challenges brought by the COVID-19 pandemic. That capital will continue to be deployed to support our clients’ pandemic recovery efforts, employee health and safety initiatives, and investments in systems and technology to deliver on our Better Banking promise,” said Security Bank President and CEO Sanjiv Vohra.