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To our stockholders and friends:
Historically, companies domiciled in emerging markets, particularly in the
Philippines, have been exposed to numerous global and domestic variables that make for a challenging operating
environment. Year after year our country has gone through severe difficulties whether it be the result of tension in the political
landscape, inflationary pressures or concerns over the fiscal condition of government.
These factors tested the abilities of Security Bank, and
I am pleased to report that we have risen to the challenge, exceeding
our expectations with record achievements. In 2005,the Bank registered a record net income after tax of P1.16 billion, representing
an increase versus the previous year of 50% and
more impressively, the second year of at least 50%
growth. Return on equity increased to a
double-digit return of 13.4%, higher than the 8.4%
registered last year, while our total resources
increased from P88.3 billion to P105 billion.
In line with our strong performance, we increased our cash dividends by 100% from
P0.50 per share in 2004 to P1.00 per share in 2005 paid by way of a
P0.50 regular and P0.50 special cash dividend respectively. This increased dividend payout shows a 3.5% yield versus 2.9% in 2004.
We are committed to building a sustainable base of core earnings without compromising our asset
quality. Our efforts at squarely addressing the impairment of non-performing assets (NPA)
early on and committing to a credible plan to resolve
these issues have enabled us to focus on growth rather than divert a significant amount of organizational resources towards
defraying the drag that non-performing assets (NPA)
impose on bank profitability. At the end of 2005 asset quality has resulted
in a non-performing loans (NPL) ratio of 5.25%,down from the
6.7% reflected in 2004.NPL cover stood at 142%.The Bank ’s
NPA ratio has also shown significant improvement decreasing to 11.2% from the previous year’s 13.4%. Our enhanced operating profits have enabled us to adequately provide for any impairment in NPAs as NPA cover significantly increased to 80% from 44% a year earlier.
The aggressive tact we have taken in addressing impairment issues have clearly placed us among the very best of the industry in terms of asset quality. The foresight with which we implemented measures to address these issues has ensured a painless transition toward the adoption of the new prescribed Philippine Accounting Standards (PAS). In line with the adoption of best practices in corporate governance and financial transparency, we are fully compliant with PAS requirements as of year-end 2005. After full PAS compliance, the Bank’s capital adequacy ratio stood at 14.4%.
These achievements have received the endorsement of investors as Security Bank ’s share price improved 19%ending the year at
P34.50 from its 2004 year-end closing price of
P29.00.As we execute the final phase of our three-year strategic plan in 2006,we are con fident Security Bank ’s continued success will enhance our goals of increasing shareholder
value. As of this writing, actual results for the first quarter 2006 have been exceptionally
strong, and augur well for the rest of the year. We
are pleased to disclose an increased semi-annual cash dividend in 2006 of
P0.75 per share, further improving dividend yield to 4.4%.Our share price as of March 2006 closed at -P -43.50 per
share, reflecting a broader base of investor interest in the Bank.
Security Bank is now looking beyond 2006 to ensure that we sustain our past
achievements. We will enter new endeavors to ensure a strong recurring earnings
base, continue to deliver process-oriented productivity, and
balance the need for meeting both short and long-term
goals. We believe our solid performance reflects the astuteness and competent execution of our strategic
plans, as well as our focus on good governance in balancing the needs of our
stakeholders: customers, business associates,
shareholders, all Security Bankers and the community we serve.
On behalf of our Board of Directors and the whole Security Bank family,we are committed to completing 2006, our 55th year of corporate life with another stellar performance. Thank you for your continued con fidence and support.
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