SECURITY Bank Corp. saw double-digit earnings growth in the third quarter of 2016, which boosted its end-September profit to reach P6.6 billion as strong net interest income offset weak securities trading gains.
In a statement released Wednesday, Security Bank said its net income for the third quarter grew 26 percent year-on-year to P1.8 billion, driven by a 27 percent increase in net interest income to P4.1 billion.
For the first nine months of the year, the bank netted P6.6 billion, up 9 percent year-on-year.
“This result was driven by a 28-percent growth in net interest income, equivalent to a P2.5 billion increase. This more than made up for the P1.3-billion decrease in securities trading gains from P2.9 billion in the first nine months of 2015 to P1.6 billion this year,” it stated.
Security Bank said the increase in net interest income to P11.5 billion came on the back of a 24- percent loan growth. Total deposit growth was 9 percent.
Low-cost deposits grew 21 percent, while high-cost deposits were flat year-on-year as the bank put to use the recent P37 billion in capital investment received from The Bank of Tokyo Mitsubishi UFJ Ltd. in April.
It also reported that corporate/commercial loans increased 20 percent year-on-year.
The bank’s key consumer loan portfolios–composed of home and auto loans and credit card receivables–accelerated to a 74-percent growth rate.
Its consumer loans now account for 13 percent of the total loan portfolio, up from 10 percent a year ago.
Security Bank’s net interest margin for the nine-month period was 3.1 percent, while its non-interest income was P4.1 billion, of which service charges, fees and commissions amounted to P1.6 billion.
The lender’s operating expense growth, excluding provisions for probable credit losses and impairments, was 12 percent, while cost-to-income ratio was 49 percent
It also provided P664 million in allowance for probable credit losses in the nine-month period.
Security Bank said its asset quality remained healthy with net non-performing loan ratio (NPL) at 0.33 percent. NPL reserve cover was at 169 percent.
“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,” Security Bank president and chief executive officer Alfonso Salcedo Jr. said.
Salcedo said Security Bank’s financial results over the last several quarters reflect the lender’s “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 chief financial officer Joselito Mape said the bank’s loan-to-deposit ratio is at 90 percent, while its capital stands at P96 billion as of end-September.
He added that the bank’s capital adequacy ratios are strong, with Common Equity Tier 1 (CET 1) at 18.4 percent and total capital adequacy ratio of 21 percent.
“Our book value per share increased 37 percent to P127.14 as of end-Q3 2016 from P92.86 as of end-Q1 2016. Total assets stand at P680 billion, up 41 percent from year ago,” he added.