Security Bank Posts Php 2.38 Billion Profit in Q1-2019 on Strong Revenue Growth of 20%

06 May 2019, Makati, Philippines – Security Bank Corporation (PSE: SECB) posted Php 2.38 billion in net income in the first quarter of 2019, up 1.5% versus year-ago level and up 15% from quarter-ago. Total revenues grew 20% year-on-year to Php 7.6 billion. A core revenue component, net interest income from customer loans and deposits sustained its healthy trajectory growing by 29% to Php 4.7 billion. This was driven by the continued expansion of retail loans and low-cost deposits. Retail loans grew 49% while low-cost deposits increased 11%. Retail loans now account for 23% of total loans versus 17% a year ago.

Total loans grew 12% year-on-year to Php 412 billion. Total deposits increased 10% to Php 461 billion. Net interest spread on loans and deposits increased to 4.98% in Q1-2019, up 26 basis points quarter-on-quarter and 78 basis points year-on-year. Total net interest income grew by 15% to Php 5.8 billion. Interest income from financial investments grew 11%. Overall, net interest margin increased to 3.43% in Q1-2019, up 5 basis points quarter-on-quarter and 19 basis points year-on-year.

Service charges, fees and commissions increased 26% to Php 857 million. Major contributors were credit cards, loan fees, bancassurance, deposit charges and stock brokerage. Securities trading gains amounted to Php 671 million, up from Php 416 million in Q1-2018. Total non-interest income increased by 39% to Php 1.8 billion.

Cost-to-income ratio of 53.7% was marginally better than 2018’s 53.9% despite a year-on-year operating expense growth (excluding provisions for credit and impairment losses) of 22%. Expense growth was driven mainly by gross receipts and documentary stamp taxes followed by manpower costs. Headcount increased by 450 primarily to support growth of the retail banking business and transformation of the Bank’s infrastructure, processes and culture. Manpower now stands at 5,950.

Asset quality remained healthy, with gross non-performing loan (NPL) ratio of 0.75%. The Bank set aside Php 295 million for provision for credit losses. NPL reserve cover increased to 186% from 111% a quarter-ago. Lastly, provision for income tax likewise increased by 31% or Php 194 million year-on-year.

Security Bank continues to be among the country’s best capitalized private domestic universal banks. Common Equity Tier 1 Ratio further increased to 16.5% from 16.4% a quarter-ago. Total Capital Adequacy Ratio likewise increased to 19.0% from 18.7%. Return on shareholders’ equity was 8.6%. Shareholders’ capital was Php 111 billion, up by 5% from year-ago level. Total assets increased 9% to Php 763 billion.