Security Bank projects P530-M profit this year

Security Bank Corp. (SBC) is projecting a net income of P500 million to P530 million this year, an increase of 17 percent to 24 percent over the P427-million net income posted by the bank last year.

SBC president Rafael F. Simpao said the projected modest growth in earnings is based on proper management of spreads, expenses and an increase in other income.

"Deposits is projected to grow by a modest single digit," Simpao added.

January to March earnings grew by 4.72 percent to P133 million, slightly better than that P127 million recorded in the same period last year.

SBC does not plan to raise Tier 2 capital this year as it continues to maintain a sufficient 12-percent capital adequacy ratio.

Non-performing loans (NPL) ratio is seen to remain at a healthy 12 percent coming from an 11.7-percent ratio in 2001.

Loan-loss provisioning remains at 59 percent which will be raised slightly to 60 percent by yearend. However, Simpao said that they would review the level of provisioning by the third quarter of the year.

The bank formed a remedial management team to collect and dispose if necessary all its NPLs within the year. SBC had earlier indicated its plans to hold talks with foreign asset management companies (AMCs) for the sale of its bad debts.

"In the immediate future, we have no plans of partnering with an AMC," bank officials said. "We originally held talks with interested AMCs but they declined to make any commitments until after the SPAV bill has been passed into law."

The special purpose asset vehicle or SPAV bill would legalize various forms of asset disposal by local or foreign groups held by local financial institutions. It would lay the ground rules for acquisition, ownership, disposal and tax incentives for AMCs.

Meanwhile, SBC declared a cash dividend of P0.10 yesterday with record date on June 11.

Simpao said the bank does not expect any dramatic income growth in 2002 due to poor economic conditions and the conservative nature of the bank.

The bank registered an unaudited after loan-loss provisioning net income of P427 million last year, growing by a slim one percent over the P421 billion recorded in 2000. It had a total of P1.008 billion in loan loss provisioning and a non-performing loans (NPL) ratio of 11.7 percent for the same period.