Security Bank H1 profit rises 4% as efficiency gains deepen

Insider Spotlight

• First-half net income rose 4 percent to P6.10 billion
• Second-quarter profit jumped 25 percent sequentially to P3.40 billion
• Revenue growth outpaced expenses, but net loans increased just 1 percent
  
  
  

Security Bank Corp. booked a 4-percent increase in first-half net income to P6.10 billion as stronger revenues and improved operating efficiency helped offset elevated credit-loss provisions.

The results show the lender extracting more earnings from its existing business even as loan growth remained subdued. Second-quarter net income rose 25 percent from the previous quarter and 11 percent year on year to P3.40 billion, pointing to stronger momentum entering the second half.

Driving the numbers

Total revenues climbed 11 percent to P34.90 billion in the first semester, while pre-provision operating profit jumped 21 percent to P15.40 billion. Net interest income reached P32.40 billion, with net interest margin at 5.78 percent.

Operating expenses increased just 3 percent, significantly slower than revenue growth, pushing the cost-to-income ratio down to 55.7 percent from 59.6 percent a year earlier.

Security Bank said in its earnings statement that it maintained a prudent approach to credit, booking P7.60 billion in provisions for credit losses during the semester. Its gross non-performing loan ratio improved to 3.04 percent from 3.16 percent a year earlier, while reserve cover strengthened to 85 percent from 79 percent.

Loan growth stays muted

Net loans stood at P675 billion, up just 1 percent year on year, as Security Bank continued to rebalance its portfolio toward higher-quality segments.

Deposits, meanwhile, reached P891 billion, with current and savings account deposits rising 8 percent and accounting for 52 percent of the total.

Common Equity Tier 1 ratio improved to 12.6 percent, while total capital adequacy ratio rose to 13.5 percent.

“As Security Bank marks its 75th year, we are building momentum with discipline,” said Victor Lee, president and CEO of Security Bank. “We grew revenues faster than expenses, improved efficiency, strengthened reserve cover, and maintained strong capital and liquidity. Our focus is to keep growing responsibly while making banking simpler, faster, and more responsive for the customers and businesses we serve.”

What’s next

Investors will be watching whether stronger second-quarter profitability carries into the second half, alongside the pace of loan growth and further changes in asset quality. — Princess Daisy C. Ominga | Ed: Corrie S. Narisma