Security Bank sees up to 15% higher lending

MANILA, Philippines — Listed Security Bank Corp. sees its loan book growing faster this year amid the strong jump in retail lending as well as sustained increase in disbursements to the wholesale sector.

Alfonso Salcedo, president and chief executive officer of Security Bank, said the rise in the bank’s lending would accelerate to around 13 to 15 percent this year from 12 percent last year.

Security Bank’s loan book expanded by 12 percent to P416 billion, while its deposit base went up by 18 percent to P489 billion. Its wholesale loan grew seven percent while retail lending surged 47 percent.

For this year, the bank is looking at increasing its wholesale loan segment back to double digit levels while sustaining the surge in the retail segment at between 40 and 50 percent.

The wholesale segment accounts for the bulk or 80 percent of the bank’s total loan book and the remaining 20 percent covers the retail segment.

According to Salcedo, the bank was selective in extending loans to the wholesale segment last year resulting to a single-digit growth from the 20 percent average growth over the past years.

“That slowdown was not demand driven, the demand was there but we were selective in the loans that were giving in terms of pricing. We walked away from loan transactions wherein interest rates or the loan rates were below the risk-free rate because it doesn’t make sense or lose money at rates that even eat up your capital. So we just couldn’t drop our heads around that,” he said.

Salcedo said the bank’s credit growth forecast is in line with the industry’s target range of between 13 and 17 percent depending on the developments in the trade war between the US and China as well as inflation in the domestic front.

“Around 13 to 15 percent if the Build Build Build and then the expansionary spending of the government happen sooner than later maybe credit growth could be back to 17 percent. But I think it is safe to say it will be somewhere the 15 number,” Salcedo said.

The Duterte administration has committed to spend around P9 trillion for about 75 big-ticket projects under its massive infrastructure build up until 2022.

According to Salcedo, the Philippines is now at the end of a credit cycle and loan growth ranged from high teens to low 20s over the past seven years.

“We don’t see any red flags nor amber flags in terms of any industry that looks like it is under stress,” he said.