Security Bank posts P9.1-B profit

SECURITY BANK Corp. saw its net income decline by 13.74% last year, mainly due to higher expenses and as it set aside more loan loss reserves, it said on Thursday.

The lender’s attributable net profit stood at P9.105 billion in 2023, down from P10.556 billion the prior year, its financial statement disclosed to the stock exchange showed.

This translated to a return on average equity of 6.95% and return on assets of 1.06%, down from 8.42% and 1.37%, respectively.

For the fourth quarter alone, its net earnings stood at P1.5 billion.

“The economy is adjusting to moderating levels of inflation and continued elevated interest rates. Our growth for 2023 in both loans and deposits was evident across our retail and SME (small and medium enterprises) segments. In turn, our wholesale teams successfully secured key mandates to support client growth initiatives. We will accelerate that growth in 2024 and continue to deliver on our transformation goals,” Security Bank President and CEO, Sanjiv Vohra said.

The bank’s total revenues grew by 8% to P43 billion last year.

Net interest income rose by 18.76% year on year to P34.73 billion from P29.25 billion. This came despite a 91.3% increase in interest expenses to P14.361 billion as interest earnings climbed by 33.6% to P49.095 billion, driven by higher interest income from loans amid better volume.

Security Bank’s net interest margin rose to 4.49% in 2023 from 4.23% in 2022.

Meanwhile, other income decreased by 20.8% to P8.2 billion.

“Service charges, fees and commissions grew 15% to P6.1 billion, led by increase in fees from credit cards, remittances (which include InstaPay fees) and bancassurance,” Security Bank added.

On the other hand, the bank’s operating expenses excluding loan loss and impairment provisions grew by 13.9% to P26.099 billion last year “driven by investments in manpower and technology,” it said.

Its cost-to-income ratio rose to 60.75% in 2023 from 57.80% in 2022.

“The bank set aside P4.8 billion as provisions for credit and impairment losses in 2023, a 69% increase versus year-ago level of P2.8 billion given impacts from provisions releases in 2022 and elevated costs for credit cards in 2023,” Security Bank added.

The bank’s net loans grew by 7% to P538.33 billion last year.

“Retail and MSME loans combined accelerated to 29% growth rate year-on-year from the 16% growth posted in 2022. Wholesale loans were same as year-ago level. The growth in retail and MSME loans was driven by home loans which grew 18% year-on-year, credit cards which rose 44%, auto loans which grew 36%, and MSME (micro, small and medium enterprises) loans which grew 77%,” it said.

“Retail and MSME loans as percent of total loans increased to 29%, up from 24% a year ago. Total investment securities grew 20% year-on-year to P227 billion,” it added.

Its nonperforming loan (NPL) ratio was at 1.37% last year, up from 1.05% in 2022, while NPL cover was at 82.13%, down from 101.12% previously.

Meanwhile, total deposits inched up by 0.11% to P606.53 billion, with 60% of the total being low-cost current and savings account or CASA deposits, up from the 58% share the year prior.

The bank’s net loans-to-deposit ratio stood at 88.76% in 2023, up from 82.96% the year prior.

Its assets grew by 3.47% to P871.51 billion at end-2023 from P842.29 billion a year ago.

Total equity likewise increased by 8.17% to P136.13 billion.

The bank’s common equity Tier 1 ratio was at 15.3% last year, down from 16.11% in 2022, while its capital adequacy ratio stood at 16.19%, also lower than the year-ago level of 16.6%.

Its liquidity ratio was at 34.74%, down from 37.22% in 2022.

“The bank maintains healthy liquidity, with liquidity coverage ratio at 158% and net stable funding ratio at 131% as of Dec. 31,” it added.

The lender has a total of 326 branches and 662 automated teller machines to date.

Security Bank’s shares declined by P2.05 or 2.81% to end at P71 apiece on Thursday. — AMCS