Security Bank income up 10.3% to P835.7M in Q1

Security Banking Corp. posted a net income of P835.7 million in the first three months of 2008, up 10.3 percent from the same period a year earlier, bank officials said.

Growth was boosted by a 33-percent increase in interest earnings from loans and receivables to P235.7 million as loans went up 42.7 percent to P48.1 billion.

Net interest income, a main source of bank earnings, rose to P1.1 billion.

The bank said it still expects strong loan growth this year despite the anticipated slowdown in economic growth.

Loan growth expanded 55.2 percent last year to P52 billion, surpassing the bank’s original target of a 20-percent growth.

Security Bank chief finance officer Carlos M. Borromeo said loan growth this year would not be as dramatic as last year, which he described as an extraordinary period.

“Loan growth will be strong but not as strong as last year,” Borromeo said, adding that growth will still remain in the double-digit level.

Borrowings from corporate accounts as well as other sectors like mining, tourism, energy, transportation and property are seen to lead this year’s loan expansion.

The corporate lending sector accounts for 60 percent of its total loan portfolio, followed by the middle market including the small and medium enterprises (SME) comprising 32 percent. The balance consists basically of consumer lending in the areas of mortgage and auto loans.

Security Bank will be adding five new branches this year: Wack-Wack in Mandaluyong, Laoag in Ilocos, Urdaneta in Pangasinan, Mandaue in Cebu and Cagayan de Oro.

Borromeo said the bank’s casual branch expansion is due to its emphasis on the corporate and middle market over consumer banking. Majority of the 115 branches of Security Bank are located in the National Capital Region and in the major urban areas outside of Metro Manila.

Extending its reach outside of its branch network comes in the form of alliances with other institutions including rural banks and non-bank financial institutions such as insurance companies and remittance providers.

Last year, Security Bank reported a net income growth of 12.7 percent, from P2.080 billion in 2006 to P2.345 billion. Part of its significant earnings were realized from trading and securities gains. Capital adequacy ratio (CAR) stood at 14.5 percent.

This year, trading gains are expected to contribute less due to the depressed conditions afflicted by the US economic slowdown, high inflation and volatile equities market.