Security Bank Posts Net Income of Php1.2 Billion in Q1; Up 11%

Makati–(PHStocks)–Security Bank (PSE : SECB) reported a net income of P1.2 billion in the first quarter of 2013, an 11% increase from year-ago level. This translates to a return on equity of 13%.

Total assets grew by 20% year-on-year to P258.9 billion. Loans increased by 21% to P119.2 billion. In support of economic development, loans went to critical sectors such as power, utilities, infrastructure, wholesale and retail trade, food, agriculture and consumer goods. Deposits likewise grew by 22% to P141.8 billion, which matched the pace of loan growth.

In 2012, Security Bank made significant investments to increase its branch network, strengthen core businesses and develop new businesses such as consumer lending. The Bank added 72 branches, including the 38 branches of the former Premier Development Bank (now Security Bank Savings) which it acquired in February 2012. Two more Security Bank branches were opened in the first quarter of 2013. As of the end of March 2013, the Security Bank group has a total of 210 branches, of which the universal bank has 172 branches and thrift bank subsidiary Security Bank Savings has 38 branches.

The Bank’s revenues for the first quarter of 2013 grew by 31% year-on-year to P3.1 billion. Contributing to revenue growth was non-interest income which increased by 230% to P1.1 billion, driven by the Bank’s fee and other income generating core activities. Service charges, fees and commissions grew by 60% driven by capital markets, stock brokerage, deposits and loan fees, while trust income increased by 22%. Gains from the trading portfolio also increased as the Bank took advantage of favorable market conditions.

Net interest income from the interest differential business was steady at P2 billion. The net interest margin was lower at 3.6% from 4% a year ago as market interest rates continued to decline precipitated by the 165 basis point reduction in the interest rate for the Special Deposit Account of the Bangko Sentral ng Pilipinas (BSP) over the year.

Operating costs (excluding provisions for credit losses and impairments) increased by 45% year-on-year to P1.7 billion. This cost growth reflects the impact of the 2012 branch network expansion. Manpower compensation increased due to higher headcount, as did occupancy costs, depreciation and amortization and other branch expansion-related cost items. The cost-to-income ratio was 54%.

Security Bank President and Chief Executive Officer Mr. Alberto S. Villarosa said, “Our business results as well as the execution of our business expansion strategy are on track with our objectives. The Bank is well positioned to service the requirements of our customers and key sectors of the economy during this exciting period for our country ushered in by its rating upgrade to investment grade by Fitch Ratings and Standard and Poors. The Philippines broke through a critical rating level and this opens up the country to new investment opportunities.”

Security Bank Chief Financial Officer Mr. Joselito E. Mape said, “Our operating expenses and cost-to-income ratio reflect the impact of our investments in branch expansion. Cost discipline remains a priority and we aspire to maintain the favorable cost-to-income ratio comparisons relative to industry benchmarks. Asset quality remains strong with the non-performing loan (NPL) ratio at 0.69%, which is lower than the 1.20% a year-ago. NPL ratio based on the new BSP definition is at 0.05%. Our reserve cover is 218%. Capital adequacy ratios (CAR) are strong with total CAR of 19% and tier 1 CAR of 17%.”

Security Bank was recently awarded by The Asian Banker of Singapore as the “Best Managed Bank in the Philippines” during The Asian Banker Leadership Awards in April 2013 in Jakarta, Indonesia. Security Bank President and CEO Alberto S. Villarosa was awarded as the “Best CEO for the Philippines” in The Asian Banker CEO Leadership Award for the period 2011-2013. In 2012, The Banker of the Financial Times of London awarded Security Bank with the “Bank of the Year” of the Philippines, and The Asian Banker named Security Bank as the “Strongest Bank in the Philippines”.

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