Outstanding performance

While its larger colleagues are suffering from declining incomes, one bank has stood out, and continues to stand out.

Security Bank’s net profit for the first half of 2014 was up 115 percent year on year, besting results of even larger industry peers whose bottomlines have dropped from between 18 and 50 percent.

The bank earned P3.614 billion in net income in the first half of 2014, representing a 115-percent growth and a 17.2-percent return on shareholders’ equity (ROE).

Bank officials note that the first half result was driven by sustained growth in core businesses, with loan portfolio increasing 30 percent year-on-year to P173 billion, investment securities expanding 106 percent to P111 billion, and deposits growing 22 percent to P218 billion, which fuelled a 31-percent increase in Security Bank’s total assets to P385 billion.

Loan-to-deposit ratio was 79 percent while return on assets (ROA) was 1.9 percent.

Net interest income increased 46 percent to P5.8 billion in the first half, while net interest margin was sustained at 3.5 percent. Core revenues – which consist of net interest income, fee-based income, and trading gains attributable to customer flows – increased 31 percent year-on-year to P7 billion.

The bank has reported that its total operating income increased 59 percent year-on-year to P8.4 billion, while operating cost (excluding provisions for credit losses and impairments) grew by 11.8 percent.

Ten new branches were opened in the second quarter of 2014. The group now has a network of 253 branches and 444 ATMs.

Security Bank in 2014 is implementing BetterBanking, a comprehensive re-branding and retail bank transformation aimed at making banking easier and better for clients. Clients currently enjoy enhancements in services that include transaction alerts every time they use their cards, no charges for transacting at other banks’ ATMs, faster and paper-less transactions in the branches, faster approvals for home mortgage and consumer loan applications, among others.

Security Bank president and CEO Abet Villarosa notes that all their business segments strongly contributed to the results, thanks to the healthy economy and their strong customer focus and business discipline.

Cigarette war

Just recently, the Bureau of Customs slapped cigarette firm Mighty Tobacco Corp. an additional P216 million in duties for alleged illegal imports after the agency discovered alleged discrepancies in the firm’s import-export transactions.

Earlier on Jan. 17, the BOC shut down Mighty’s customs bonded warehouse after initial findings of the agency showed that the company violated the tariff and customs law. According to the BOC, the suspension would compel the low-cost cigarette maker to declare every single imported item it was supposed to use in the production of cigarettes for the domestic market.

The agency last May asked Mighty to pay P852.9 million for the importation of tobacco and acetate tow, the raw material for cigarette filters.

BOC is actually reinvestigating Mighty’s importations in the past three years.

Mighty has been the subject of investigations by both the customs bureau and the Bureau of Internal Revenue after Finance Secretary Cesar Purisima ordered the two agencies to look into alleged illicit trade practices of the company which may have resulted in P4.4-billion in uncollected excise taxes last year.

Government is actually questioning why Mighty is able to sell cigarettes at very low prices despite the sharp increase in excise tax rates last year.

It is likewise wondering why despite increases in excise tax rates, collections from the cigarette industry have not gone up as expected.

But Mighty has been insistent that it did not commit any illegal importation of raw materials, adding that the Customs assessment is just part of a regular “liquidation process.”

And some sectors have been saying that the increase in excise taxes only resulted in encouraging cigarette smuggling, and unfortunately for Mighty, someone has to be blamed.

But more that the higher excise taxes, let us see how the cigarette industry will be affected by a bigger threat – the new law requiring graphic health warnings on cigarette packages which took effect last Aug. 7.

Under the law, the DOH is tasked to issue a maximum of 12 templates of graphic health warnings to be printed simultaneously on cigarette packs. The Graphic Health Warning Law gives tobacco companies a year from issuance of the necessary templates to comply, and an additional eight months to sell all the cigarette packs without graphic health warnings.

Earlier, Senate President Franklin Drilon said the Graphic Health Warning Law along with the Sin Tax Law would dramatically reduce the number of smokers in the country, especially among the youth.

From the readers

Thank you for your news article about the shift to digital TV broadcasting. There has been very little information on this subject considering that the 2015 switch-over year is less than a semester away. Not much can be found on the NTC web site. I noticed (based on mfr web site info) that some TV sets being sold in the local market includes the DVB-T tuners, which I believe is a European standard, not the Japanese standard. I hope I am wrong with this observation. I wish there were more information about the ISDB-T standard and how we, consumers, can be protected when the digital switch-over becomes reality. How it would affect our present TV, radio, smartphone and tablet purchases when the digital switch over happens, is a very important topic for consumers, at least financially. Thank you and I look forward to more “consumer-protection” information on the digital switch-over. More power to your column. – Larry delos Santos, Paranaque City