Security Bank allots P21 billion for loan losses

MANILA, Philippines — Security Bank Corp. has set aside P21.1 billion for potential credit losses in nine months as it continues to help clients survive uncertainties brought about by the COVID-19 pandemic.

Sanjiv Vohra, president and chief executive officer at Security Bank, said the bank has maintained proactive credit provisioning given economic challenges arising from the global health pandemic, while its revenues, margins and capital are resilient.

“We are prudently supporting our clients, continuing vigilance in managing risks, and investing in initiatives to fortify our services,” he said.

The amount of provisions during the nine-month period was 12 times the P1.75 billion allocated from January to September last year.

The bank said its gross non-performing loan (NPL) ratio of 4.03 percent more than doubled the 1.58 percent in the second quarter while NPL reserve cover was 122 percent.

For the third quarter alone, Security Bank earmarked P10.07 billion for potential loan losses or nine times the P1.11 billion allocated in the same quarter last year.

As a result, the bank’s net income fell 63.5 percent to P1 billion from July to September compared to P2.74 billion in the same period last year.

Its net interest income went up by 7.5 percent to P7.55 billion in the third quarter from P7.02 billion in the same quarter last year, while trading gains amounted to P5.18 billion or 14 times last year’s P368.97 million and foreign exchange gains or 4.5 times the P99.83 million recorded last year.

From January to September, earnings declined by 13.4 percent to P6.66 billion from P7.69 billion in the same period last year due to the record provision for potential loan losses.

During the nine-month period, the bank’s total net interest income surged 24 percent to P23.39 billion from P18.86 billion.

Securities trading gains reached P12.36 billion from January to September or about nine times last year’s P1.42 billion, while foreign exchange gains quadrupled to P1.05 billion from P251.59 million.

Service charges, fees and commissions declined by 10 percent to P2.58 billion from P2.87 billion.

Security Bank’s total operating income jumped 66.4 percent to P40.23 billion from P24.17 billion, while expenses surged 149.4 percent to P36.47 billion from P14.62 billion primarily due to the higher provision for credit losses.

The bank’s loan book slipped by three percent to P431 billion, while its deposit base increased 10 percent to P436 billion.

Return on shareholders’ equity was at 7.3 percent and return on assets was 1.23 percent.

Total assets stood declined by 19 percent to P651 billion from P793 billion.