SECURITY Bank Corp. posted P4.3 billion in net income in the first half of 2018. This is 18 percent or P951 million lower than year-ago level primarily due to the decrease in trading gains by 59 percent or P655 million and the increase in provision for income tax by 55 percent or P424 million.
Loans grew 12 percent year-on-year, while deposits increased 17 percent. Net interest income from customer loans and deposits increased by 34 percent, or P1.8 billion, to P7.4 billion. Interest income from financial investments decreased by 13 percent or P717 million to P4.8 billion on lower securities portfolio, which, likewise, dropped by 13 percent year-on-year. As such, total net interest income grew by 8 percent to P10 billion. Service charges, fees and commissions increased by 16 percent to P1.3 billion. The growth in fee income was broad-based, led by bancassurance, credit card and loan fees.
Deposit growth accelerated to 17 percent, increasing by P63 billion from year-ago level to reach P443 billion as of June 30, 2018. Low-cost deposits increased by 15 percent. The loan-to-deposit ratio improved to 86 percent, from 90 percent a year ago.
Loans grew 12 percent to P383 billion as of June 30, 2018, after a strong 27-percent increase a year ago in the first half of 2017. Wholesale loans grew 7 percent. Consumer loans continued their strong growth trajectory at 50 percent. Consumer loans now account for 18 percent of total loan portfolio. Net interest spread on loans and deposits was 4.27 percent in the second quarter of 2018, up 7 basis points quarter-on-quarter and 39 basis points year-on-year.
Asset quality remained healthy, with gross nonperforming loan ratio down to 0.6 percent, from 0.7 percent a year ago. Provision for credit losses was P90 million in the second quarter of 2018. The NPL reserve cover was at 261 percent, the highest in the industry. Cost-to-income ratio was 54.6 percent. Operating expense growth was 12.9 percent, excluding provisions for credit and impairment losses, driven by the bank’s investment in digitalization and information-technology transformation.
Security Bank’s judicious use of capital resulted in sustained strong capital adequacy ratios. Common Equity Tier 1 Ratio was at 16.19 percent and Total Capital Adequacy Ratio was at 18.46 percent in the second quarter of 2018 versus 16.63 percent and 18.95 percent, respectively, a year ago. Security Bank continued to be among the country’s best capitalized private domestic universal banks with the highest capital adequacy ratios. Return on shareholders’ equity was 8.1 percent. Shareholders’ capital was P107 billion, up by 6 percent, from year-ago level. Total assets stood at P722 billion.
At 67 years, Security Bank is among the six largest private domestic universal banks in the Philippines by total assets (at P703 billion) as of March 31, 2018.
Security Bank’s major awards received in 2018 are: The Best Retail Bank in the Philippines for 2018 by The Asian Banker; Best Retail Bank in the Philippines 2018 by Alpha Southeast Asia; Best Bank in the Philippines 2018 by Global Finance; and Asia’s Best CEO (Investor Relations, Philippines) for Mr. Alfonso L. Salcedo Jr., Asia’s Best CFO (Investor Relations, Philippines) for Mr. Joselito E. Mape and Best Investor Relations Company Philippines from Corporate Governance Asia.