Security Bank nets P6.7 billion in 2011

MANILA, Philippines - Security Bank Corp. registered a net income of P6.7 billion in 2011, 6.9 percent lower than the P7.2 billion realized in 2010.

Security Bank president and chief executive officer Alberto S. Villarosa explained that the drop in earnings last year was due mainly to the unusual or one-time income gain in 2010.

“We were one of the first universal banks to comply with the Philippine Financial Reporting Standards (PFRS) 9 financial instruments,” Villarosa noted.

PFRS 9 is the local adoption of International Financial Reporting Standards (IFRS) 9 Financial Instruments - the first phase of the three-phased improvement project by the International Accounting Standards Board (IASB) to ultimately replace International Accounting Standards (IAS) 39 Financial Instruments: Recognition and Measurement. Phases 2 and 3 of the project deal with amortized cost and impairment of financial assets and hedge accounting, respectively.

The early adoption resulted in income gains for Security Bank, leading to the extraordinary 135-percent increase in earnings in 2010 from P3.06 billion in 2009.

The non-recurring gains from the early adoption amounted to P3.5 billion.

Meanwhile, the bank’s total assets expanded 30 percent to P215 billion, with its loan portfolio expanding 24 percent to P92 billion as of yearend 2011, spurred by strong credit demand in the top corporate and middle market segments.

With the asset growth from loans and investments, net interest income likewise grew 24 percent to P7.5 billion. This translated to a healthy net interest margin of 4.1 percent.

This strong core revenue performance was complemented by service charges and foreign exchange income, growing P171.3 million or 11 percent, which compensated for lower trading gains.

It recorded a non-performing loan (NPL) ratio of less than one percent and a reserve cover of 308 percent, among the highest in the industry.

Return on equity (ROE) stood at 25 percent, while capital adequacy ratio (CAR) of 20.3 percent demonstrates a capital base capable of supporting further expansion and growth.