Moody’s affirms rating, outlook of Security Bank

MANILA, Philippines — Moody’s Investors Service has retained the investment grade rating and stable outlook of Security Bank Corp. as it highlighted the bank’s strength arising from robust outlook and stable profitability.

Sanjiv Vohra, president and chief executive officer at Security Bank, said the bank’s strong capital position is an important pillar that both our clients and employees could rely upon to weather the challenges brought about by the  pandemic.

“That capital will be deployed to support our clients’ pandemic recovery efforts, employee health and safety initiatives, and investments in systems and technology to deliver Better Banking,” Vohra said.

Last Monday, the debt watcher affirmed Security Bank’s investment grade credit rating of Baa2 with stable outlook, on the back of the bank’s robust capitalization and stable profitability, supported by lower cost of funds.

Security Bank’s common equity tier 1 (CET1) capital ratio increased to 19.1 percent as of end-September   from a year-ago level of 17.1 percent as shareholders’ capital increased by five percent to P124 billion.

“Security Bank has among the highest capitalization ratios among private domestic universal banks in the Philippines,” the bank said.

The bank’s total capital adequacy ratio (CAR) increased to 19.9 percent from 18 percent, well above the 10 percent threshold set by the Bangko Sentral ng PIlipinas (BSP) and the eight percent requirement by Bank of International Settlements (BIS).

Just like other big banks, earnings of Security Bank slipped by 13 percent to P6.66 billion from January to September   compared to P7.69 billion in the same period last year due to the record provision for potential loan losses amid the COVID-19 pandemic.

During the 9-month period, Security Bank Corp. allocated P21.1 billion for potential credit losses as it maintained proactive credit provisioning given economic challenges arising from the global health pandemic.

The amount was 12 times the P1.75 billion allocated from January to September last year.

The bank said its gross non-performing loan (NPL) ratio was 4.03 percent more than double the 1.58 percent in the second quarter due to challenges arising from the pandemic and the resulting economic impact, while NPL reserve cover was 122 percent