Security Bank earns 43% more in 2014

MANILA, Philippines - Security Banking Corp. (Security Bank) has reported a 43-percent increase in net income, or from P5 billion in 2013 to P7.2 billion this year.

The full year 2014 performance represents a 16.3-percent return on shareholders’ equity (ROE).

Security Bank president and chief executive officer Alberto S. Villarosa said the bank turned in a solid and balanced performance.

“Earnings results and return on shareholders’ equity remain among the industries highest; our balance is even healthier, attributable mainly to asset quality and proven capital strength; and, most importantly, our core businesses have outperformed themselves in demonstrating growth in their respective franchises,” Villarosa said.

In early 2014, Security Bank launched its BetterBanking re-branding initiatives in conjunction with its retail bank transformation.

Due to the bank’s rebranding of its image and culture, deposits rose by 20-percent year-on-year to P247 billion as loans likewise increased by 17 percent to P194 billion.

These resulted in the bank’s total assets increasing by 14 percent to P397 billion by the end of 2014.

Loan-to-deposit ratio was 78 percent, while the shareholders’ capital increased by 15 percent to P47 billion.

Asset quality remained firm and healthy with net non-performing loans (NPL) ratio at 0.28 percent – among the lowest in the Philippine banking industry.

NPL reserve cover stood at 200 percent end 2014, likewise among the highest in the industry.

Despite the challenges of margin compression, net interest income increased by 33-percent year-on-year to P11.2 billion.

Net interest margin (NIM) was 3.4 percent.

Core revenues – comprised of net interest income, fee-based income, and trading gains attributable to customer flows – grew by 26 percent to P13.6 billion.

Fee-based income was P1.7 billion, or eight percent higher versus previous year. Over-all trading gains were at P3.6 billion.

Total operating income increased by 36 percent to P16.8 billion. Operating expense growth (excluding provision for probable credit losses and impairments) was 17 percent due to investments in people, branches, re-branding and retail bank transformation.

The cost-to-income ratio was 47 percent.

The bank opened 12 new branches in Metro Manila and key cities in the provinces which increased total network to 256 branches end-December, including 39 branches of thrift bank subsidiary Security Bank Savings; launched the operating lease business through SB Rental Corp., wholly owned subsidiary of SB Capital; and entered into bancassurance partnership with FWD Life, which was subsequently approved by the Bangko Sentral ng Pilipinas (BSP) in last month.

In October 2014, Standard & Poor’s assigned to Security Bank a credit rating of BB+.

At the start of 2015, Security Bank completed its inaugural offshore issuance of $300-million senior unsecured notes, which were six times oversubscribed. The proceeds will be used to extend term liabilities and expand the foreign currency deposit unit (FCDU) funding base.

Meanwhile, Villarosa said the bank’s wholesale grew robustly in terms of deposits, loans and earnings while its retail banking operations was well on track in its strategic direction towards becoming a significant contributor to its core business.

“We have evidently started to realize the benefits of our re-branding campaign as we gain recognition from our target market,” Villarosa added.

Capital remains strong with Basel III Common Equity Tier 1 (CET 1) of 14.3 percent and total capital adequacy ratio (CAR) of 18.4 percent at the end of 2014.

In July 2014, Security Bank issued P10-billion Basel III compliant Tier 2 Notes.