Security Bank Corporation (PSE: SECB) posted net profit of PHP8.5 billion in the first nine months of 2024 (9M-2024), up 12% year-on-year. Revenue growth accelerated in 9M-2024 at 28% year-on-year compared to the 24% posted in H1-2024.
9M-2024 total revenues increased to PHP40.0 billion, driven by growth in both net interest income and non-interest income. Net interest income increased 31% to PHP32.4 billion. Net interest margin in 9M-2024 remained robust at 4.90%. Total non-interest income likewise increased 18% year-on-year to PHP7.6 billion. Service charges, fees and commissions grew 55% to PHP6.7 billion.
9M-2024 operating expense was 24% higher, driven by investments in manpower and technology to accelerate transformation. Cost-to-income ratio was 58.8% which is better than the 60.7% a year ago.
9M-2024 pre-provision operating profit was up 34% year-on-year to PHP16.5 billion. The Bank set aside PHP5.1 billion as provisions for credit losses in 9M-2024, an increase versus year-ago level of PHP2.6 billion. Gross non-performing loan ratio was 3.08% and NPL reserve cover was 79.5%.
Return on shareholders’ equity was 8.1%. Return on assets was 1.2%.
Quarterly Results: For the period July 1 to September 30, 2024 (Q3-2024), net profit was PHP3.0 billion, up 14% year-on-year and up 7% quarter-on-quarter. Q3-2024 total revenues increased to PHP14.4 billion, up 36% year-on-year and up 9% quarter-on-quarter.
Q3-2024 net interest income was PHP10.7 billion, up 19% year-on-year. Net interest margin in Q3-2024 was 4.66%. Total non-interest income in Q3-2024 was PHP3.6 billion, up 129% year-on-year and up 62% quarter-on-quarter. Q3-2024 non-interest income was driven by securities trading gains of PHP889 million, and service charges, fees and commissions of PHP1.8 billion which grew 20% year-on-year. In Q3-2024, the Bank set aside PHP1.8 billion as provisions for credit losses, same level as quarter ago. Q3-2024 pre-provision operating profit was PHP5.8 billion, 42% higher than year-ago level.
Balance sheet remains strong
Total deposits increased to PHP720 billion, up 28% year-on-year. CASA deposits increased 11% year-on-year. CASA as percent of total deposits was at 53%.
Net loans accelerated to 24% growth rate year-on-year from the 19% posted in Q2-2024. Quarter-on-quarter, net loans increased 8%, amounting to PHP623 billion as of September 30, 2024. Retail and MSME loans sustained its growth, up 38% year-on-year. Wholesale loans accelerated to 19% growth rate year-on-year from the 14% posted in Q2-2024. The growth in retail and MSME loans was driven by home loans which grew 21%, credit cards which rose 70%, auto loans which grew 51%, and MSME loans which increased 58%. On a sequential quarter-on-quarter basis, retail and MSME loans increased 9%. Retail and MSME loans as percent of total loans increased to 32%, up from 29% a year ago. Total investment securities grew 30% year-on-year to PHP280 billion.
The Bank maintains healthy liquidity, with Liquidity Coverage Ratio (LCR) at 186% and Net Stable Funding Ratio (NSFR) at 135% as of September 30, 2024.
Security Bank’s capital ratios remain strong. Common Equity Tier 1 Ratio was 13.3% and Total Capital Adequacy Ratio (CAR) was 14.2%. Total assets increased to PHP1.0 trillion, up 26% year-on-year. Shareholders’ capital likewise increased to PHP143 billion, up 8% year-on-year.
On October 29, 2024, the Bank’s Board of Directors approved the second semestral regular cash dividend of PHP1.50 per common share with payment date on November 27, 2024. This will bring the total cash dividends for the year to PHP3.00 per common share. The Bank had earlier paid regular cash dividend for the first semester of PHP1.50 per common share on April 29, 2024.
“We are pleased with our third quarter results. The combination of our client engagement, significant investments in our team and our technology has accelerated the bank’s growth. We are excited about delivering on our Better Banking promise.” — Security Bank President & CEO, Sanjiv Vohra.