Security Bank Corporation earned Php 3.36 billion in net income in the first quarter of 2015, representing 135% year-on-year growth resulting in a 28% return on shareholders’ equity (ROE).
Security Bank posted healthy growth in core business, with loan growth of 20% year-on-year to Php 199 billion and deposit growth of 17% year-on-year to Php 247 billion. The loan-to-deposit ratio was 81%. Total assets were at Php 409 billion as of March 31, 2015, 8% increase from year-ago. The return on assets (ROA) was 3.3%.
Interest income increased by 15% year-on-year and 8% quarter-on-quarter. Interest expense increased by 47% year-on-year and 11% quarter-on-quarter, reflecting the expected effect of the Php 10 billion Basel III compliant Tier 2 capital issued in July 2014 and the USD 300 million senior unsecured notes issued in January 2015. As a result, net interest income grew by 4% year-on-year and 7% quarter-on-quarter to Php 2.9 billion. Net interest margin was 3.3% for the period, same level as in Q4-2014 and versus the 3.4% average in 2014.
Non-interest income increased more than three times year-on-year to Php 3.4 billion, which included extraordinary trading gain of Php 2.1 billion from sale of investment securities. Excluding extraordinary trading gain, non-interest income was Php 1.4 billion, 72% increase year-on-year. Fee-based income inclusive of asset management posted 20% growth year-on year to Php 482 million.
Core revenues – comprising of net interest income, fee-based income, and trading gain attributable to customer flows – grew by 9% year-on-year to Php 3.6 billion.
Security Bank’s total operating income increased by 77% year-on-year and 96% quarter-on-quarter to Php 6.3 billion. Operating cost (excluding provisions for credit losses and impairments) grew by 46% year-on-year and 14% quarter-on-quarter due to taxes and licenses and intensified advertising and marketing expenses. The cost-to-income ratio was 40%. Pre-provision-and-pre-impairment income was at Php 3.8 billion, 107% increase from year-ago level. Provision for probable credit losses was Php 188 million in Q1-2015.
Asset quality remained healthy, with the net non-performing loan (NPL) ratio at 0.08% in Q1-2015, which is among the lowest in the banking industry. NPL reserve cover was at 198%, which is among the highest in the industry.
“We thank our customers and partners for their trust and support. Our core businesses – Financial Markets, Wholesale and Retail Banking – continued to produce healthy results after a robust 2014 performance. As we focus to deliver the best value to our customers and grow the Retail Bank as a third pillar to our business, we are greatly pleased to have Mr. Alfonso ’Yogi’ Salcedo, Jr. – with his depth and breadth of experience and vision in consumer banking – as our new President and CEO,” Security Bank Chairman Mr. Alberto S. Villarosa said.