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To our stockholders and friends:
As in years past, the Philippine economy and
business sector in 2007 was subjected to a myriad
of challenges.
Although the domestic economy was on an upswing,
significantly buoyed by a supportive low interest
rate environment and a much improved fiscal
performance, it was confronted by risks of a
global nature. Global economic factors caused a
chain reaction of turmoil and volatility that laid
havoc on the world’s financial markets. Moreover,
oil and commodity prices continued their upward
spiral, riding the tide of increased demand from
newly developing markets such as China and
bolstering concerns over inflation. Concurrently,
the backlash from the sub prime mortgage crisis in
the United States set the stage for deflationary
pressures as housing demand slowed and a credit
squeeze ensued. These effects were quite evident
in the financial markets as, one after another,
dominant players in the global financial services
industry announced significant write-downs in
their portfolios. These developments raised the
specter of vulnerability among well established
banking institutions previously perceived to be
immune to such a massive fallout.
In stark contrast, I am very pleased to report
that we have continued on a path of exceptional
performance initiated in 2003, as Security Bank’s
net income reached P2.7 billion, a 42% increase
over the previous year. These stellar results
firmly underscore our commitment to create value
for all our stakeholders without compromising good
governance and asset quality. This translated to
yet another record return on equity of 22% for
Security Bank, the highest among private domestic
universal banks and a healthy improvement over the
17% achieved in 2006.
The track record we have established over the last
few years remains aligned with the key objective
of value creation for all our stakeholders
regardless of the constraints and obstacles laid
before us. It is firmly grounded on a solid
foundation of good corporate governance and risk
management. These compelling results have likewise
enabled us to share a greater portion of our
success with the communities we serve.
Increasingly, today’s world of high speed
communication and borderless economies is laying
waste to the belief that dominance is greatly
associated primarily with scale. We are
perceptively more convinced that success
ultimately goes to the fluid and flexible
institutions characterized by first-rate execution
capabilities. Although there is still A tangible
room for improvement, we believe we are headed in
a direction that will continue to support our aim
to build core value for the institution,
regardless of the vagaries of the environment.
This is largely enabled by our focus on enhancing
customer acquisition and loyalty coupled with our
investments in top caliber talent and technology.
Our focus on building a sustainable franchise has
ultimately translated to continued increases in
our share price ending the year at P78.50, a 20%
improvement over year-end 2006 and generating an
incremental market value for our shareholders of
P4.3 billion.
While the contagion of recent events has not
spared the region’s equity markets, we are
confident that we will continue along the path of
growth for our core businesses and their resulting
contribution to value. We are quite optimistic of
the opportunities that will present themselves
amidst the adjustments likely to occur in the
global economy. We remain grateful for your
continuing support as we look forward to continued
success in the years ahead.
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