Security Bank Corp. saw a double-digit drop in its first quarter net income, reflecting lower extraordinary trading gains.
In a disclosure to Philippine Stock Exchange on Monday, Security Bank said its net income amounted to P3 billion in the first three months of the year, falling by 10.7 percent from the 3.36 billion in the same period a year ago.
It earned P1.4 billion in extraordinary trading gain from investment securities in the government’s cash tender offer program.
However, it is lower than the P2.1 billion gain on sale of securities in first quarter of 2015, it added.
The bank said its net income translated to a 22 percent return on shareholders’ equity (ROE), but noted this result came before the P36.9 billion capital investment by The Bank of Tokyo-Mitsubishi UFJ, Ltd. (BTMU) in Security Bank on April 1, 2016.
Loans increased by 20 percent year-on-year to P239 billion. Deposits grew 14 percent to P282 billion, with low-cost deposits increasing 18 percent.
Security Bank’s corporate/commercial loans advanced 18 percent, while key consumer loan portfolios composed of home and auto loans and credit card receivables rose 62 percent.
Consumer loans as a percentage of total loans moved up to 11 percent in the first quarter from 7 percent a year ago.
Asset quality remained healthy, with net non-performing loan (NPL) ratio at 0.29 percent. NPL reserve cover was at 171 percent.
Total assets register at P516 billion, a 26 percent year-on-year increase. The return on assets (ROA) was 2.3 percent.
Net interest income increased by 21 percent year-on-year to P3.5 billion. The overall net interest margin was 3.1 percent, lower than the 3.3 percent average in 2015.
Notably, the bank’s net interest margin on loans improved to 3.8 percent from 3.7 percent on average in 2015.
Non-interest income, meanwhile, amounted to P2.4 billion.
The bank said the thrust to grow the retail banking business buoyed fee-based income (inclusive of asset management) by 10 percent to P531 million, driven by bancassurance, credit card and service charges on deposits, as well as asset management and advisory.
Foreign exchange gain rose 89 percent to P301 million.
Security Bank’s core revenues–consisting of net interest income, fee-based income, and trading gains attributable to customer flows–increased by 16 percent to P4.2 billion.
Operating expense, excluding provisions for probable credit losses and impairments, decreased by 1 percent.
Its cost-to-income ratio was 42 percent, while provision for probable credit losses was P212 million.
Despite the decline in net income, the bank’s President and Chief Executive Officer Alfonso L. Salcedo Jr. said Security Bank’s first quarter result was a good start to a milestone year.
He said the bank is poised to grow faster shoulder to shoulder with a new strategic partner, the BTMU.
“We are excited to work with BTMU as we share the same values of integrity, professionalism and teamwork. Security Bank will be able to level up its Better Banking promise as it is now a stronger local bank with access to BTMU’s global network,” he said.