Security Bank net earnings, return on equity up

MANILA, Philippines - The Security Banking Corp. (Security Bank) has recorded a modest eight-percent increase in net income in the first six months of 2009, but the medium-sized commercial bank continued to record an impressive return on equity (ROE) figure of 20.76 percent.

From the P1.3 billion reported in the first semester of 2008, the bank increased its net earnings to P1.4 billion on the back of strong core business versus continued provisioning for possible losses.

Loan portfolio expanded by 20.9 percent to P66.4 billion while its deposits base grew by 27.6 percent to P105 billion.

Provisions set aside for credit and impairment losses amounted to P251 million for the first six months of 2009, P153 million or 37.9 percent lower than the P404 million for the comparative period last year. 

“The provisions for the year represent the regular build up of provisions for loans and receivables as a continuing effort to strengthen the bank’s balance sheet in support of the growth in the loan portfolio rather than due to portfolio quality deterioration,” it reported earlier.

This further strengthened the bank’s non-performing loan (NPL) cover from 298 percent in June 2008 to 306 percent in the same month this year. Its NPL ratio remains flat at 1.4 percent, year-on-year.

“While signs of a global economic recovery still appear tentative, we maintain our guarded optimism for the country and the bank, “Alberto S. Villarosa, president and chief executive officer of Security Bank, said.

Net interest income expanded by 24 percent to P2.9 billion this year, from the year ago figure of P2.4 billion.

Non-interest income sources contributed P1 billion in the first six months of 2009, reflecting a P132.4-million or 11.5-percent year-on-year decrease from P1.1 billion last year. The slowdown was across majority of the non-interest income components such as service charges and fees and foreign exchange gains, it said. 

Total operating income for the first semester of 2009 grew by 12.4 percent to P3.9 billion over the prior year driven primarily by net interest income, albeit tempered by an 11.5-percent decrease in other income, which stood at P1 billion.  

With the reduction in interest rate volatility, trading and securities gains reflected a 12- percent year-on-year growth, which was offset by a 21-percent reduction in foreign exchange gains and service charges. 

Operating expenses for the period amounted to P2 billion.

“Building our core business while prudently managing risks in our earnings stream have been successful. Our sound balance sheet gives us the leverage to explore different opportunities,” the bank chief executive stressed.

Capital adequacy ratio of 14.5 percent, even after having called the P3 billion of its outstanding Lower Tier 2 Capital in the first quarter of 2009.

Meanwhile, Security Bank chief financial officer Carlos M. Borromeo said that the bank’s total resources grew by 10 percent to P140 billion end June this year versus P127.7 billion recorded in the same period last year.

“The 21 percent increase in the loan portfolio shows the Bank’s steady shift in its balance sheet profile as loans now account for 47.4 percent of total assets versus the 43 percent a year ago. This result was achieved while improving asset quality indices and capital strength,” Borromeo added.