SECURITY Bank Corp. registered a net income of P4.657 billion in the first half of 2015, higher by 29 percent over the P3.6 billion the bank made in the same period last year, despite thin margins brought by competition.
The bank’s total loans grew 20 percent year-on-year to P207 billion, while deposits went up 18 percent to P 257 billion, fueling a 15-percent year-on-year increase in total assets to P442 billion.
The bank’s net interest margin was 3.2 percent in the first six months, from 3.4 percent average in 2014.
“Margin pressure is the new normal given the industry’s liquidity. We are satisfied with the bank’s first-half performance. Yes, we are on track to hit our full year net income target,” Security Bank President and CEO Alfonso L. Salcedo Jr. told the BusinessMirror.
Salcedo said the bank’s strategy for the year is to grow the retail-banking business into a strong third pillar complementing the strengths in wholesale banking and financial-markets businesses.
During the first half, loan growth was broad-based, with corporate or commercial loans growing by 18 percent, while consumer loans surged by 90 percent. The loan-to-deposit ratio was 81 percent.
“Retail banking has steady growth, sustainable and higher-margin business, which is less volatile than cyclical businesses,” he said.
The bank’s interest income on loans grew 17 percent, which contributed to total interest-income growth of 11 percent year-on-year.
Interest expense increased by 46 percent year-on-year, reflecting the expected effect of the longer-term funding that the bank issued.
Security Bank issued the P10-billion Basel 3 compliant Tier 2 capital in July 2014 and the $300- million senior unsecured notes in February 2015. As a result, net-interest income was at P5.8 billion, same level as a year ago.
Noninterest income rose 69 percent to P4.4 billion, which includes extraordinary trading gains of P2.1 billion. Excluding extraordinary trading gains, noninterest income was P2.3 billion, a 58-percent increase year-on-year. Gains from trading portfolio and customer flows amounted to P906 million in the first semester.
Fee-based income inclusive of asset management was P947 million, up 11 percent year-on year.
Security Bank earned P1.3 billion in net income for the second quarter. Interest income on loans increased by 4 percent quarter-on-quarter, which contributed to the 2-percent quarter-on-quarter growth in total-interest income.
Security Bank Chief Financial Officer Joselito E. Mape said the bank’s capital adequacy ratios under Basel 3 were sustained at healthy levels, with Common Equity Tier 1) at 13 percent and total capital adequacy ratio at 16.5 percent.
The bank’s asset quality remained healthy, with net nonperforming loan ratio at 0.14 percent as of June 2015, compared to 0.25 percent a year ago, among the lowest in the banking industry
Security Bank has a network of 257 branches and 532 automated teller machines nationwide as of June 30, 2015.