Security Bank Corp., the country’s sixth largest lender, said Monday net income declined 11 percent in the first quarter to P3 billion from P3.36 billion a year ago, on lower trading gains.
Security Bank said in a statement the first-quarter profit translated into a 22-percent return on shareholders’ equity.
The bank said it booked the profit before the P36.9-billion capital infusion by The Bank of Tokyo-Mitsubishi UFJ Ltd. on April 1.
Security Bank said despite the decline in net earnings, core businesses continued to post remarkable numbers, particularly loans and deposits.
Loans increased 20 percent to P239 billion, while deposits grew 14 percent to P282 billion, with low-cost deposits increasing 18 percent. Corporate and commercial loans advanced 18 percent.
Key consumer loan portfolios, composed of home and auto loans and credit card receivables, rose 62 percent. Consumer loans as a percentage of total loans moved up to 11 percent from 7 percent a year ago.
“Our first-quarter result was a good start to a milestone year for Security Bank. We are poised to grow faster shoulder to shoulder with our new strategic partner The Bank of Tokyo-Mitsubishi UFJ Ltd., Japan’s largest bank,” Security Bank president and chief executive Alfonso Salcedo Jr. said.
“We are excited to work with BTMU as we share the same values of integrity, professionalism and teamwork. Security Bank will be able to level up its ‘Better Banking’ promise as it is now a stronger local bank with access to BTMU’s global network,” Salcedo said.
Asset quality remained healthy, with net non-performing loan ratio at 0.29 percent. NPL reserve cover was at 171 percent. Total assets was at P516 billion, a 26-percent year-on-year increase. The return on assets stood at 2.3 percent.
Net interest income increased 21 percent to P3.5 billion and overall net interest margin was 3.1 percent, lower than the 3.3-percent average in 2015. Net interest margin on loans improved to 3.8 percent in the first quarter from 3.7 percent average in 2015.
Non-interest income amounted to P2.4 billion.
The thrust to grow the retail banking business resulted in fee-based income (inclusive of asset management) increasing 10 percent to P531 million, driven by bancassurance, credit card and service charges on deposits, as well as asset management and advisory.
Core revenues, consisting of net interest income, fee-based income and trading gains attributable to customer flows, increased 16 percent year-on-year to P4.2 billion.
Operating expenses, excluding provisions for probable credit losses and impairments, decreased 1 percent year-on-year. The cost-to-income ratio was 42 percent. Provision for probable credit losses was P212 million during the quarter.
Common equity Tier 1 ratio was 12.1 percent and total capital adequacy ratio, a measurement of financial strength, was 15 percent, above Bangko Sentral’s minimum requirement of 8.5 percent and 10 percent, respectively.
Security Bank executive vice president and chief financial officer Joselito Mape said that on a pro-forma basis, hareholders’ capital post-BTMU equity investment was P92.9 billion as of April 1, 2016.
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