Security Bank Corporation’s (PSE: SECB) Q2-2023 results improved across the board on a sequential quarter-on-quarter basis. Q2-2023 net profit was PHP2.6 billion, up 8% quarter-on-quarter. Pre-provision operating profit was PHP4.5 billion, 23% higher than quarter-ago level due to higher revenue growth of 10% compared to operating expense growth of 3%.
Q2-2023 net interest income grew 11% over the quarter to PHP8.3 billion. Net interest margin in Q2-2023 increased to 4.58%, up 53 basis points quarter-on-quarter and up 22 basis points year-on-year. Total non-interest income likewise increased 8% to PHP2.5 billion. Service charges, fees and commissions grew 13% to PHP1.5 billion. In Q2-2023, the Bank set aside PHP983 million as provisions for credit losses.
First Half Results: In the first half of 2023 (H1-2023), the Bank posted net profit of PHP4.9 billion, driven by growth in core businesses, increase in quarterly net interest margin, and normalized credit provisions.
H1-2023 net interest income increased 9% year-on-year to PHP15.7 billion. Total non-interest income was at PHP4.9 billion, up 2%. Service charges, fees and commissions grew 7% to PHP2.8 billion.
H1-2023 operating expense was 16% higher, driven by investments in manpower and technology. Cost-to-income ratio was 60.4% compared to 55.9% a year ago.
Pre-provision operating profit was PHP8.2 billion. The Bank set aside PHP1.6 billion as provisions for credit losses in H1-2023, an increase versus year-ago level of PHP408 million. Gross non-performing loan ratio decreased to 3.06% from 3.28% a year ago. NPL reserve cover increased to 100% from 92% a year ago.
Return on shareholders’ equity was 7.67%. Return on assets was 1.20%.
Balance sheet remains strong
Total deposits stood at PHP525 billion. Low-cost savings and demand deposits as percent of total deposit increased to 63%, up from 59% a year ago. The Bank shed high-cost deposits, resulting in a 13% year-on-year decrease in time deposits.
Net loans stood at PHP485 billion. Retail and MSME loans combined increased 19% year-on-year while wholesale loans decreased 9%. The growth in retail and MSME loans was driven by home loans which grew 15%, credit cards which rose 33%, auto loans which grew 13%, and MSME loans which increased 62%. On a sequential quarter-on-quarter basis, retail and MSME loans combined increased 5%. Retail and MSME loans as percent of total loans increased to 28%, up from 26% a quarter ago and 23% a year ago. Total investment securities grew 32% year-on-year to PHP220 billion.
The Bank maintains healthy liquidity, with Liquidity Coverage Ratio (LCR) increasing to 183% as of June 30, 2023, from 167% in previous quarter, and Net Stable Funding Ratio (NSFR) increasing to 128% from 127% in previous quarter.
Security Bank continues to be among the country’s best capitalized private domestic universal banks. Common Equity Tier 1 Ratio increased quarter-on-quarter to 16.8%. Total Capital Adequacy Ratio (CAR) likewise increased to 17.1%. Total assets increased to PHP796 billion, up 4% year-on-year. Shareholders’ capital likewise increased to PHP131 billion, up 5% year-on-year.
For 2023, Security Bank was recognized Best Retail Bank in the Philippines by Alpha Southeast Asia for the fourth consecutive year; awarded Best for High Net Worth in the Philippines by Asiamoney for the third consecutive year; and was awarded Excellence in Employee Engagement by Retail Banker International in the RBI Asia Trailblazer Awards 2023. SB Capital Investment Corporation (Security Bank’s investment house subsidiary) was awarded Top Corporate Issue Manager/Arranger by the Philippine Dealing System (PDS) Group at the 18th Philippine Dealing System Annual Awards Night.
“We are encouraged with the progress made in the second quarter on both net margins and other income, while we continue with investments in technology and people to better serve our clients’ needs.” — Security Bank President & CEO, Sanjiv Vohra.