Security Bank Corporation (PSE: SECB) posted net profit of PHP5.4 billion in H1-2024, up 11% year-on-year, driven by accelerated growth in business drivers.
H1-2024 total revenues grew 24% year-on-year to PHP25.7 billion. Net interest income increased 38% to PHP21.7 billion. Net interest margin in H1-2024 was 5.20%, up 96 basis points year-on-year. Service charges, fees and commissions grew 74% to PHP4.9 billion.
H1-2024 operating expense was 20% higher, driven by investments in manpower and technology to accelerate transformation. Strong performance led to a cost-to-income ratio of 58.4%, lower than the 60.4% a year ago.
H1-2024 pre-provision operating profit was up 30% year-on-year to PHP10.7 billion. The Bank set aside PHP3.3 billion as provisions for credit losses in H1-2024, an increase versus year-ago level of PHP1.6 billion. Gross non-performing loan ratio was 3.31% and NPL reserve cover was 81%.
Return on shareholders’ equity was 7.94%. Return on assets was 1.20%.
Quarterly Results: For the period April 1 to June 30, 2024 (Q2-2024), net profit was PHP2.8 billion, up 10% year-on-year and up 7% quarter-on-quarter. Q2-2024 total revenues increased to PHP13.2 billion, up 22% year-on-year and up 6% quarter-on-quarter.
Q2-2024 net interest income increased to PHP10.9 billion, up 32% year-on-year and up 2% quarter-on-quarter. Net interest margin in Q2-2024 was 5.18%, up 59 basis points year-on-year. Total non-interest income was PHP2.2 billion, up 28% quarter-on-quarter. Service charges, fees and commissions was PHP1.8 billion, up 19% year-on-year. In Q2-2024, the Bank set aside PHP1.8 billion as provisions for credit losses.
Q2-2024 pre-provision operating profit was PHP5.8 billion, 18% higher than quarter-ago level due to higher revenue growth of 6% quarter-on-quarter compared to operating expense which decreased by 2% quarter-on-quarter.
Balance sheet remains strong
Total deposits increased to PHP676 billion, up 29% year-on-year. CASA deposits increased 9% year-on-year. CASA as percent of total deposits was at 54%.
Net loans accelerated to 19% growth rate year-on-year from the 12% posted in Q1-2024. Quarter-on-quarter, net loans increased 6%, amounting to PHP577 billion as of June 30, 2024. Retail and MSME loans sustained its growth, up 37% year-on-year compared to the 32% posted in Q1-2024. Wholesale loans accelerated to 14% growth rate year-on-year from the 4% posted in Q1-2024. The growth in retail and MSME loans was driven by home loans which grew 21%, credit cards which rose 60%, auto loans which grew 50%, and MSME loans which increased 68%. On a sequential quarter-on-quarter basis, retail and MSME loans increased 8%. Retail and MSME loans as percent of total loans increased to 32%, up from 31% a quarter ago and 28% a year ago. Total investment securities grew 22% year-on-year to PHP268 billion.
The Bank maintains healthy liquidity, with Liquidity Coverage Ratio (LCR) at 180% and Net Stable Funding Ratio (NSFR) at 133% as of June 30, 2024.
Security Bank’s capital ratios remain strong. Common Equity Tier 1 Ratio was 13.9% and Total Capital Adequacy Ratio (CAR) was 14.8%. Total assets increased to PHP948 billion, up 19% year-on-year. Shareholders’ capital likewise increased to PHP138 billion, up 6% year-on-year.
“Our second quarter results reflect accelerating velocity for our Retail, MSME & Wholesale client teams. We allocated substantial resources to support our clients’ aspirations as indicated in the growth of loans and deposits. Likewise, we continue to invest in technology to improve customer experience, security & agility. This led to healthy growth in net income year-on-year and quarter-on-quarter. Operating jaws turned positive 4%.” –– Security Bank President & CEO, Sanjiv Vohra.