Security Bank Cites Sustainable Growth of its Core Businesses

30 April 2019, Makati, Philippines – During the annual stockholders’ meeting of Security Bank Corporation (PSE: SECB) on Tuesday, 30 April 2019, the following were elected to the Security Bank Board: incumbent directors Diana P. Aguilar, Philip T. Ang (independent), Anastasia Y. Dy, Frederick Y. Dy, Joseph R. Higdon (independent), James J. K. Hung (independent), Jikyeong Kang (independent), Napoleon L. Nazareno (independent), Cirilo P. Noel, Takahiro Onishi, Alfonso L. Salcedo, Jr., Rafael F. Simpao, Jr., Masaaki Suzuki and Alberto S. Villarosa, and new independent director Gerard H. Brimo. During the organizational Board meeting, key appointments were for Frederick Y. Dy as Chairman Emeritus, Alberto S. Villarosa as Chairman, Anastasia Y. Dy as Vice Chairman, and Alfonso L. Salcedo, Jr. as President and Chief Executive Officer.

In his report on 2018 operations, President and CEO Alfonso L. Salcedo, Jr. pointed to 2018 as a milestone year. After five years, Security Bank has built the retail banking business as a strong third business pillar of the Bank. Security Bank is now a full-fledged universal bank with wholesale banking, financial markets and retail banking as its three business pillars. Importantly, Security Bank is well-positioned for sustainable growth.

2018 net income was Php 8.6 billion, lower by 16% versus 2017 primarily due to a decrease in trading gains and an increase in provision for income taxes. 2018 showed continued strong growth in Security Bank’s core businesses. Net interest income from customer loans and deposits increased 30% compared to 13% for the top ten private domestic universal banks. Fee income increased 26% versus industry’s 11%. Bancassurance, which commenced in 2015, has now become the largest fee income contributor.

Security Bank’s retail loan portfolio continued its strong growth momentum, increasing by 47% in 2018. Its compounded annual growth rate (CAGR) for the five-year 2014-2018 period was 53% versus the Philippine banking system’s 17%. This growth was driven by all five retail loan products of the Bank, namely, home, auto, credit card, small business and personal loans. Retail loans now account for 20% of the Bank’s total loans, versus 7% in 2014. Security Bank’s total loan portfolio has grown by a CAGR of 21% versus industry’s 17%. Asset quality remained healthy, with gross non-performing loan ratio at 0.7%, lower than industry’s 1.3%. Deposits grew 18%, faster than industry’s 9%. Security Bank’s deposit growth has consistently outperformed industry in the last five years, growing at a CAGR of 19% versus industry’s 11%.

Security Bank is the best capitalized bank among the top ten private domestic universal banks. The Bank’s Core Equity Tier 1 and Total Capital Adequacy ratios were at 16.4% and 18.7%, respectively. Return on shareholders’ equity (ROE) was 8.1%. Cost-to-income ratio was 53.9% versus industry’s 63.6%. Total assets grew 10% to Php 767 billion in 2018. 2014-2018 CAGR was 18% versus industry’s 11%. The Bank paid cash dividends of Php 3.00 per share in 2018, same as in 2017.

Also highlighted were the major awards received by the Bank. Security Bank was named Bank of the Year–Philippines 2018 by The Banker. Known as the “Oscars of the banking industry,” Security Bank has won this award four years (2018, 2016, 2015, 2012) out of the last seven years. Security Bank was also named Best Bank in the Philippines for 2018 by Global Finance. Security Bank was awarded The Best Retail Bank in the Philippines for 2018 and, most recently, for 2019 by The Asian Banker. The Asian Banker’s International Excellence in Retail Financial Services Awards is the most coveted awards program that recognizes excellence among the world’s leading retail financial institutions.

Mr. Salcedo stated that Security Bank is focused on three medium-term strategic goals: (1) grow all three business pillars of the Bank, namely, wholesale banking, financial markets and retail banking; (2) transform the Bank’s infrastructure, processes and culture to support its growth aspirations and deliver its BetterBanking promise. This transformation has two major components: (a) further improve the Bank’s digital platform to become a strong distribution, sales and service channel; and, (b) improve operations processes with digital optimization initiatives; and, (3) regain industry-leading ROE.