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Security Bank Corporation (PSE: SECB) posted a net income of P1.01 billion for the first semester of 2006, 50.7% more than the P670 million earnings for the same period last year and is almost equal the net earnings achievement for the full year of 2005 which stood at P 1.16 billion. Earnings per share for the first semester of 2006 likewise increased from P2.03 to P3.07 per share this year. The Bank’s average return on equity has shown considerable improvement over the years, increasing from the single digit levels reflected after the Asian financial crisis to the current annualized return on average equity of 19.5%, a significant growth over the 12.6% in the comparative period last year.
The robust earnings performance is driven by a continued growth in revenues, increasing 12.5% over the same period last year to P 3.08 Billion from P 2.74 Billion. This remarkable accomplishment was achieved amidst a decreasing interest rate environment for the better part of the first semester that led to some pressure on net margins but provided opportunities for recognizing trading gains on its securities portfolio. Consequently, non-interest income increased point to point by P 387.3 million or 45.4% spurred on by a P 358.8 million or 84.6% increase in trading gains and a P 48.9 million or 38.3% increase in other income.
The Bank is on track with its commitment to address asset quality issues, having fully complied with the IAS/PAS requirements at year-end 2005. As a result, provisions for credit losses have registered a significant decrease over the same period last year to P 282.9 million, down by P 224.4 million or 44.2%. In fact, for the first half of the year, Security Bank’s NPL ratio stood at 4.2% with NPL cover at 142% versus the 5.0% and 76% respectively for the same period last year.
The Bank’s total resources remained relatively flat to the 2005 year-end level of P 105.0 billion. Security Bank likewise continues to leverage on the efficiency of its distribution network further increasing its deposit base to P 73.9 billion from the P 66.2 billion recorded in the same period last year.
This P 7.7 billion or 11.7% increase resulted primarily from a growth in lower cost savings and current accounts.
The Bank continues to exhibit a fundamentally sound capital base with its capital adequacy ratio at 24.2% versus year-end reported levels of 14.4%. This places the Bank in a very healthy position to leverage on its balance sheet and further build its loan portfolio as the opportunities arise in the market place.
Security Bank underscores its admirable performance with additional international acclaim as the Bank was recently recognized by Finance Asia in its Asia’s Best Companies 2006 Poll as among the top ten companies with the “Best Commitment to Strong Dividend Payments”, a reflection of its continued commitment to creating shareholder value.
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