The rating action reflects expectations that Security Bank’s capitalization will remain a key buffer against moderate declines in asset quality and profitability through 2026 to 2027. The bank’s liquidity profile also remains strong, helping offset what Moody’s described as modest funding conditions.
Capital levels are projected to improve over the next 12 to 18 months, supported by internal capital generation outpacing usage.
As of end-2025, tangible common equity relative to risk-weighted assets stood at 16.4 percent, up from 15.8 percent a year earlier, as loan growth slowed sharply to 3 percent from 25 percent, based on a company disclosure.
What’s changing
Asset quality is weakening slightly, with stage 3 loans rising to 3.0 percent and stage 2 loans climbing to 5.9 percent. Moody’s expects further moderate deterioration, driven by retail loan seasoning, lingering effects from a flood-control probe, and higher living costs weighing on borrowers.
At the same time, loan loss reserves improved to 86 percent of stage 3 loans, though still below domestic peers’ average of 93 percent.
Profit pressure
Profitability is expected to moderate, with credit costs nearly doubling to 1.7 percent in 2025 and likely staying elevated.
Return on tangible assets slipped to 1.0 percent, although stronger trading and foreign exchange gains helped cushion the decline.
Funding and support
Funding stability improved as reliance on less-stable funds dropped to 18 percent. Liquidity strengthened, with core banking liquidity rising to 29 percent.
Moody’s noted the bank’s rating sits one notch above its standalone credit profile, reflecting a moderate likelihood of government support, given its roughly 4 percent share of system deposits. —Princess Daisy C. Ominga | Ed: Corrie S. Narisma
