Security Bank seeks P20 B from LTNCD issuance

MANILA, Philippines - Listed Security Bank Corp. is raising P20 billion through the issuance of long-term negotiable certificates of deposit (LTNCD) to support its growing asset portfolio.

The country’s 5th largest bank in terms of assets informed the Philippine Stock Exchange (PSE) that its board of director approved the fund raising activity during its meeting yesterday.

Security Bank said the LTNCD issuance would still be subject to regulatory approvals.

LTNCDs are negotiable certificates of deposit with a designated maturity, and represent a bank’s obligation to pay the face value upon maturity, with periodic coupon or interest payments during the life of the deposit. Interest income is exempt from withholding taxes if the LTNCDs are held for at least five years.

Earnings of Security Bank climbed 8.1 percent to P5.24 billion in the first half from P4.85 billion in the same period last year after a strong rebound in its core businesses in the second quarter of the year.

The listed bank attributed the increase in net profit to the 26 percent rise in net interest income to P9.3 billion in the first half of the year, enough to offset the 15 percent decline in non-interest income to P2.9 billion due to lower trading gains.

Security Bank’s loan book surged 27 percent to P340 billion as wholesale portfolio including corporate and middle market loans grew 27 percent while consumer loans zoomed 49 percent.

On the other hand, the bank’s deposit base rose 26 percent to P380 billion in the first half as low-cost deposits went up 21 percent.

The bank’s total assets increased 26 percent to P775 billion in end-June this year. It opened 25 new branches in the first half, bringing its total footprint to 296 branches and 667 ATMs.

The family of businessman Frederick Dy and the Bank of Tokyo – Mitsubishi UFJ Ltd. jointly own Security Bank. Japan’s largest bank pumped in P37 billion in fresh equity for a 20 percent stake in the listed bank last year.

Security Bank is the latest bank to foray into the LTNCD issuance as banks continue to tap the capital markets for low cost of funding.