Security Bank Corporation (PSE: SECB) posted net profit of PHP2.6 billion in Q1-2024, reflecting growth in its Retail and MSME businesses.
On a year-on-year basis, net profit grew 11%. Total revenues increased 27% to PHP12.5 billion. Net interest income rose 44% over the year to PHP10.7 billion. Total non-interest income was at PHP1.8 billion. Service charges, fees and commissions increased 136% year-on-year to PHP3.1 billion, boosted by the Bancassurance milestone fee. Excluding extraordinary items on both revenue and expense, which offset each other, normalized net income would be largely unchanged.
On a sequential quarter-on-quarter basis, net profit rose 71%. Total revenues grew 6%. Net interest margin increased to 5.32%, up by 12 basis points versus quarter-ago level and up by 126 basis points versus year-ago level. Net interest income grew 7% over the quarter. Service charges, fees and commissions increased 76% quarter-on-quarter.
Given sustained investments in manpower and technology to accelerate transformation, operating expense was 24% higher versus year-ago level. Strong revenue performance led to a cost-to-income ratio of 60.7%, lower than the 62.6% a year ago.
Pre-provision operating profit was PHP4.9 billion, up 34% year-on-year. The Bank set aside PHP1.5 billion as provisions for credit losses in Q1-2024, which is 30% lower than the quarter-ago provisions of PHP2.2 billion in Q4-2023. Gross non-performing loan ratio was 3.4% and NPL reserve cover was 81%.
Return on shareholders’ equity increased to 7.71%, up from 7.42% a year ago. Return on assets likewise increased to 1.20%, up from 1.15% a year ago.
Balance sheet remains strong
Total deposits increased to PHP638 billion, up 22% year-on-year. CASA deposits increased 6% year-on-year. CASA as percent of total deposits was at 56%.
Three new Security Bank branches were opened during the first four months of 2024, bringing the Bank’s branch network to 328 branches to-date. The new branches are located in Davao North Diversion (Davao City), Sta. Mesa (Manila), and Ilagan City (Isabela).
Net loans increased to PHP545 billion, up 12% year-on-year and up 1.3% quarter-on-quarter. Retail and MSME loans further accelerated to 32% growth rate year-on-year from the 29% posted in the fourth quarter of 2023. Wholesale loans grew 4% year-on-year. The growth in retail and MSME loans was driven by home loans which increased 18% year-on-year, auto loans which rose 46%, credit cards which grew 49%, and MSME loans which grew 74%. On a sequential quarter-on-quarter basis, retail and MSME loans increased 6%. Retail and MSME loans as percent of total loans increased to 31%, up from 26% a year ago and up from 29% a quarter ago. Total investment securities increased to PHP243 billion, up 23% year-on-year and up 7% quarter-on-quarter.
The Bank continues to have healthy liquidity, with Liquidity Coverage Ratio (LCR) of 184% and Net Stable Funding Ratio (NSFR) of 131% as of March 31, 2024.
Security Bank continues to be among the country’s best capitalized private domestic universal banks. Common Equity Tier 1 Ratio was 14.4% and Total Capital Adequacy Ratio (CAR) was 15.3%. Total assets increased to PHP887 billion, up 12% year-on-year. Shareholders’ capital likewise increased to PHP136.6 billion, up 6% year-on-year.
On March 26, 2024, Security Bank approved cash dividend declaration of PHP1.50 per common share representing regular semestral cash dividend, with payment date on April 29, 2024.
On May 9, 2024, Security Bank issued USD400 million of senior unsecured fixed rate bonds with coupon of 5.50%, tenor of five years, and maturity date of May 14, 2029. Settlement date was on May 14, 2024. The bonds were a drawdown of the Bank’s USD1 billion Medium Term Note Program. The strong demand and successful pricing of the dollar bond issuance reflects the market’s continued confidence in Security Bank’s credit strength and growth prospects.
“Our results for the first quarter reflect both accelerating momentum across our Retail, MSME, and Wholesale Segments. We’re excited to introduce our brand-new Security Bank app in Q2, which will enhance the online banking experience and reinforce our BetterBanking commitment.” — Security Bank President & CEO, Sanjiv Vohra.