Security Bank income drops in Q1

Ted P. Torres (The Philippine Star) - May 2, 2016 - 10:00am

Prior to BTMU entry 

MANILA, Philippines - Security Bank Corp.  posted a net income of P3 billion in the first quarter of 2016, lower than the P3.36 billion posted in the same period in 2015 to lower extraordinary trading gain during the quarter.

This precedes the P36.9-billion capital investment by The Bank of Tokyo-Mitsubishi UFJ, Ltd. (BTMU) in Security Bank last April 1.

Loans increased 20 percent year-on-year to P239 billion. Deposits grew 14 percent to P282 billion, with low-cost deposits increasing 18 percent.

Corporate/commercial loans advanced 18 percent.

Key consumer loan portfolios composed of home and auto loans and credit card receivables rose 62 percent. Consumer loans as a percentage of total loans moved up to 11 percent in the first three months of the year from seven percent in the same period last year.

Asset quality remained healthy, with net non-performing loan (NPL) ratio at 0.29 percent.

NPL reserve cover was at 171 percent.

Total assets amounted to P516 billion, a 26-percent year-on-year increase. The return on assets (ROA) was 2.3 percent.

Net interest income grew 21 percent to P3.5 billion. The overall net interest margin was 3.1 percent, lower than the 3.3 percent average in 2015.

Notably, net interest margin on loans improved to 3.8 percent in first quarter this year from 3.7-percent average in 2015.

Non-interest income amounted to P2.4 billion.

Security Bank earned P1.4 billion in extraordinary trading gain from investment securities as it participated in the government’s cash tender offer program. This gain is lower, though, than the P2.1-billion gain on sale of securities posted in the first quarter of 2015.

The thrust to grow the retail banking business resulted in fee-based income (inclusive of asset management) increasing 10 percent to P531 million, driven by bancassurance, credit card and service charges on deposits, as well as asset management and advisory.

Foreign exchange gain rose 89 percent to P301 million.

Core revenues – consisting of net interest income, fee-based income, and trading gains attributable to customer flows – increased 16 percent year-on-year to P4.2 billion.

Operating expense, excluding provisions for probable credit losses and impairments, decreased by one percent year-on-year.

The cost-to-income ratio was 42 percent. Provision for probable credit losses was P212 million during the quarter.

Security Bank president and chief executive officer Alfonso Salcedo Jr. said the first quarter result was a good start to a milestone year for Security Bank, which is poised to grow faster shoulder-to-shoulder with its new strategic partner.

“We are excited to work with BTMU as we share the same values of integrity, professionalism and teamwork. Security Bank will be able to level up its BetterBanking promise as it is now a stronger local bank with access to BTMU’s global network,” Salcedo said.

Shareholders’ capital grew 12 percent to P56 billion from retained earnings. Security Bank’s book value per share was at P92.86 as of March 31, 2016.

Common Equity Tier 1 (CET 1) ratio was 12.1 percent and total capital adequacy ratio (CAR) was 15 percent, well above the BSP’s minimum requirements of 8.5 percent and 10 percent, respectively.

Security Bank executive vice president and chief financial officer Joselito E. Mape said that on a pro-forma basis, the bank’s shareholders’ capital post-BTMU equity investment was at P92.9 billion as of April 1, 2016.

“Our pro-forma book value per share was P123.29, which is 40 percent higher than the P88.17 as of year-end 2015. Likewise, our pro-forma CET 1 ratio was 20.7 percent and total CAR was 23.5 percent,” Mape added.

In 2015, the commercial bank posted a record-high net income of P7.7 billion, seven percent higher than previous year.  – With Lawrence Agcaoili

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