13 November 2020, Makati City, Philippines – Security Bank Corporation (PSE: SECB) posted net income of Php 6.7 billion in the first nine months of 2020, driven by increases in net interest income and trading gains.
Total revenues increased 66% to Php 40.2 billion from the same period last year. Excluding trading gains, total revenues grew 22% to Php 27.9 billion.
Total net interest income grew 24% to Php 23.4 billion from year-ago level. Securities trading gains totaled Php 12.4 billion, significantly higher than Php 1.4 billion a year ago. Service charges, fees and commissions amounted to Php 2.6 billion, lower by 10%.
The cost-to-income ratio improved to 38.4% from 53.3% a year ago.
Pre-provision operating profit (PPOP) was Php 24.8 billion, 120% higher than year-ago level. PPOP in Q3-2020 was Php 9.2 billion, 120% higher than Q3-2019 level.
The Bank set aside Php 21.1 billion as provisions for credit losses in the first nine months of 2020, a significant increase versus year-ago level of Php 1.8 billion. Gross non-performing loan ratio was 4.03%, up from 1.58% in Q2-2020, given challenges arising from the pandemic and the resulting economic impact. NPL reserve cover was 122%. Allowance for credit losses as percent of total loans increased to 4.99% from 1.31% a year ago and 3.24% a quarter ago.
Return on shareholders’ equity was 7.3%. Return on assets was 1.23%.
For the period July 1 to September 30, 2020, net income was Php 1.0 billion. Total revenues increased 64% to Php 14.4 billion. Excluding trading gains, total revenues grew 9% to Php 9.2 billion from the same period last year.
Total net interest income in Q3-2020 increased 8% versus prior year to Php 7.6 billion. Net interest margin in Q3-2020 was 4.90%, up 88 basis points year-on-year and 26 basis points quarter-on-quarter. Total non-interest income increased 286% to Php 6.8 billion. Securities trading gains were Php 5.2 billion as compared to Php 369 million in Q3-2019.
Operating expense increased 2% quarter-on-quarter.
Balance sheet remains strong
Total deposits decreased 10% year-on-year to Php 436 billion. Low-cost savings and demand deposits grew 26% and increased to 59% of total deposits, up from 42% a year ago. High-cost deposits decreased 37%.
Total loans stood at Php 431 billion, down 3% year-on-year and 4% quarter-on-quarter. Retail loans were up 2% year-on-year and down 9% quarter-on-quarter. Retail loans are 26% of total loans versus 27% a quarter ago. Wholesale loans decreased 0.3% year-on-year and 3% quarter-on-quarter.
“While revenues, margins, and capital are resilient, the Bank has maintained proactive credit provisioning given economic challenges arising from the pandemic. We are prudently supporting our clients, continuing vigilance in managing risks, and investing in initiatives to fortify our services.” — Security Bank President & CEO, Sanjiv Vohra.
Security Bank continues to be among the country’s best capitalized private domestic universal banks. Common Equity Tier 1 Ratio increased to 19.1% from 17.1% a year ago. Total Capital Adequacy Ratio (CAR) likewise increased to 19.9% from 18.0% a year ago. Total assets stood at Php 651 billion, down 19% year-on-year. Shareholders’ capital was at Php 124 billion, up 5%.
On October 27, 2020, the Bank’s Board of Directors approved cash dividends of Php 1.50 per common share, representing regular semestral cash dividend of Php 1.00 per share and a special cash dividend of Php 0.50 per share, with record date on November 11 and payment date on November 26 this year. This will bring the total cash dividends for the year to Php 3.00 per common share for a dividend payout ratio of 22.4% of 2019 net income. The Bank had earlier paid cash dividends for the first semester of Php 1.50 per common share on April 30, 2020.
On October 20, 2020, the Bank launched its partnership with Bank of Ayudhya Public Company Limited, (“Krungsri”) to collaborate in serving the unsecured personal loan segment with plans to jointly explore opportunities in loan products that cater to personal and small business needs of the Filipino market. The partners intend to offer a customer-centric, digital lending experience to all Filipinos and small business owners. Krungsri purchased a 50-percent stake in the Bank subsidiary, SB Finance Company, Inc., for Php 1.5 billion.
About Security Bank
Security Bank is the seventh largest private domestic universal bank in the Philippines by total assets (at Php 740.4 billion) as of June 30, 2020. The Bank has been operating for 69 years since it was established in 1951. Security Bank has a total of 307 branches and 811 ATMs to-date.
Security Bank’s major citations in 2020 are: Best Bank in the Philippines for 2020 by The Lafferty Group (The Statement Magazine); and Best Retail Bank in the Philippines in 2020 by Alpha Southeast Asia.
Security Bank’s major awards received in 2019 are: The Best Retail Bank in the Philippines for 2019 by The Asian Banker and Deposit Product of the Year – “All Access Account” by The Asian Banker; Automobile Lending Product of the Year by The Asian Banker (Philippines Awards 2019) and Deposit Product of the Year by The Asian Banker (Philippine Awards 2019); Best Bank in the Philippines in 2019 by Alpha Southeast Asia and Best SME Bank in the Philippines in 2019 by Alpha Southeast Asia; and Best Bank for SMEs in the Philippines in 2019 by Asiamoney.
Major awards received in 2018 were: Bank of the Year – Philippines 2018 by The Banker; Best Bank in the Philippines 2018 by Global Finance; The Best Retail Bank in the Philippines for 2018 by The Asian Banker; Best Retail Bank in the Philippines 2018 by Alpha Southeast Asia; and People Program of the Year Award for Security Bank’s Total Wellness Program by People Management Association of the Philippines (PMAP).
More information is available on our website: www.securitybank.com.