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Bad loans provision drags Security Bank’s earnings

SECURITY Bank Corp. saw its net earnings decline to P7.4 billion last year following the surge in bad loans provisions to safeguard its balance sheet.

This is 26.43-percent lower than P10.10 billion it registered in 2019, according to data from the listed bank’s disclosure on Tuesday.

The shares of Security Bank, to note, climbed by 2.31 percent, or P3, to close at P133 each amid the 0.68-percent uptick for the benchmark index on Tuesday.

The bank hiked its provisions for credit losses last year by over six times to P26.4 billion from P4.2 billion in 2019 in anticipation of increase in bad loans. Gross nonperforming loans (NPL) ratio was 3.90 percent while NPL coverage stood at 115 percent.

Total revenues climbed by 48 percent to P50.4 billion while pre-provision operating profit surged by 85 percent to P30.7 billion year-on-year. Return on equity and return on assets were at 6.16 percent and 1.03 percent, respectively.

“Our 2020 results reflect the fundamental strength of Security Bank amidst a very challenging pandemic-impacted environment,” Security Bank President and CEO Sanjiv Vohra said. “Our retail and wholesale teams maintained their steadfast support of our core clients.”

Net interest income improved by 14 percent to P30.6 billion as net interest margin ramped up by 84 basis points to 4.77 percent last year.

Trading gains skyrocketed to P13.4 billion last year from just P1.5 billion year-on-year while service charges, fees and commissions slipped by 11 percent to P3.6 billion.

Miscellaneous income was up by more than threefold to P1.7 billion after the Bank of Ayudhya’s (Krungsri) acquisition of 50-percent stake in its consumer finance subsidiary, SB Finance Company Inc.

Total deposits climbed by 12 percent to P440 billion, supported by 19-percent growth in low-cost savings and demand deposits.

Gross loan portfolio inched up by P460 billion last year as retail loans declined by 10 percent for the period.

As of end-December 2020, its total assets stood at P653 billion. Capitalization was at P123 billion, with common equity tier 1 ratio of 19.2 percent and capital adequacy ratio of 20.1 percent.

Last month, Security Bank and Krungsri announced its P3-billion worth of additional investment in SB Finance. The consumer finance arm will issue 25.85 million common shares to be equally subscribed by both financial institutions after securing regulatory approvals.

SB Finance President and CEO Abigail Marie D. Casanova said in an earlier statement that the capital is allocated for business expansion as the company is set to launch multiple products this year.

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