SECURITY Bank Corp. and its partner Bank of Ayudhya (also known as Krungsri) are investing additional capital of P3 billion in consumer finance subsidiary SB Finance Co. Inc.
In a disclosure on Tuesday, the listed bank reported that both financial institutions have approved the plan to infuse more equity in SB Finance.
The consumer finance arm will issue 25.85 million common shares to be equally subscribed by Security Bank and Krungsri after the entities secured regulatory approvals.
Amid the 0.06-percent increase for the benchmark index on Tuesday, shares in Security Bank climbed by 0.70 percent, or 90 centavos, to close at P129.90 each.
SB Finance President and CEO Abigail Marie D. Casanova said that the capital is allocated for business expansion as the company is set to launch multiple products this year, anticipating the return of pent-up demand in the consumer finance segment.
“The additional capital will also be used to fund investment in the latest cloud-based technology that will support our end-to-end customer journey coupled with our digital transformation, and the strengthening of internal capabilities as we build and expand our operations,” Casanova added.
Amid the 0.06-percent increase for the benchmark index on Tuesday, shares in Security Bank climbed by 0.70 percent, or 90 centavos, to close at P129.90 each.
Security Bank President and CEO Sanjiv Vohra said that the additional capital investment signals the bank’s support in the economic recovery of the country.
“This move shows that SB Finance is ready to help foster economic growth as businesses begin to recover from the effects of the pandemic,” he said. “This additional capital infusion further cements Security Bank’s strategic partnership with Krungsri to help rebuild consumer confidence and foster financial inclusion.”
Security Bank first made the announcement about its partnership with Krungsri in August 2019, allowing the Thai bank to acquire 50-percent stake in SB Finance.
The Philippine Competition Commission approved the transaction in September last year. The partnership was finalized a month after this.
The deal is seen resulting in SB Finance growing its loan portfolio and loan products being offered to its clients. Both the Security Bank’s strength in unsecured personal loan segment and Bank of Ayudhya’s expertise in the Asean retail finance market are expected to aid the consumer finance product offering and service of SB Finance.
In a separate disclosure, Security Bank declared dividends on preferred shares to be paid on April 5 and July 12.
The listed bank saw its net income decline by 13 percent to P6.7 billion in January to September 2020 from P7.7 billion year-on-year due to elevated provisions for potential credit losses.
However, the bank recorded a 66-percent increase in total revenues for the period at P40.2 billion. Top line figures, excluding the trading gains, soared by 22 percent to P27.9 billion.
It earmarked a loan loss buffer of P21.1 billion in the first nine months of 2020, which is markedly higher compared to P1.8 billion in 2019.