Makati—(PHStocks)—Security Bank Corp. (PSE: SECB) posted PhP6.6 billion in net income in the first nine months of 2016, up 9% year-on-year. This result was driven by a 28% growth in net interest income equivalent to a PhP2.5 billion increase. This more than made up for a PhP1.3 billion decrease in securities trading gains from PhP2.9 billion in the first nine months of 2015 to PhP1.6 billion this year.
For the third quarter alone from July 1 to September 30, 2016, Security Bank’s net income grew 26% year-on-year to PhP1.8 billion. This was likewise driven by a 27% increase in net interest income to PhP4.1 billion.
In the first nine months of 2016, the increase in net interest income to PhP11.5 billion was on the back of a 24% loan growth. Total deposit growth was 9%. Low-cost deposits grew 21%. High-cost deposits were flat year-on-year as the bank put to use the recent PhP37 billion in capital investment received from The Bank of Tokyo Mitsubishi UFJ, Ltd. in April. Corporate/commercial loans increased 20% year-on-year. Key consumer loan portfolios composed of home and auto loans and credit card receivables accelerated to a 74% growth rate. Consumer loans now account for 13% of the bank’s total loan portfolio, up from 10% a year ago. Net interest margin for the nine-month period was 3.1%. Non-interest income was PhP4.1 billion, of which service charges, fees and commissions amounted to PhP1.6 billion.
Operating expense growth, excluding provisions for probable credit losses and impairments, was 12%. The cost-to-income ratio was 49%. The bank is in the midst of investing for the future, making major investments in information technology, people and branches. Security Bank currently has 280 branches and 598 ATMs nationwide, having added 18 new branches year-to-date.
The bank provided PhP664 million in allowance for probable credit losses in the nine-month period. Asset quality remained healthy with net non-performing loan ratio (NPL) at 0.33%. NPL reserve cover was at 169%.
“We are pleased with the consistency of our results. The continuing growth in our net interest income has been making up for lower trading gains. Our consumer loan portfolio has further picked up pace while low-cost deposits are growing at a healthy rate. Our financial results over the last several quarters reflect our single-minded focus on executing our strategy which is to grow our retail banking business into a strong third pillar complementing our wholesale banking and financial markets businesses, aimed at generating a more stable and sustainable income,” Security Bank President and Chief Executive Officer Alfonso L. Salcedo Jr. said.
Security Bank Chief Financial Officer Joselito E. Mape said, “We are prudently deploying the additional capital to loans, which is why our loan-to-deposit ratio is at 90%. Our capital stands at PhP96 billion as of end-Q3-2016. Our capital adequacy ratios are strong, with Common Equity Tier 1 (CET 1) at 18.4% and Total CAR 21.0%. Our book value per share increased 37% to PhP127.14 as of end-Q3-2016 from PhP92.86 as of end-Q1-2016. Total assets stand at PhP680 billion, up 41% from year ago.”