Security Bank Corp. posted higher net profit in the third quarter, even as its operating income dropped, as it significantly reduced its loan loss provisions and expenses. 

The lender’s net income rose 71% year on year to P1.715 billion in the July to September period from P1.002 billion, based on its quarterly report released on Friday. 

For the first nine months, its net income was at P4.8 billion, down from P6.7 billion last year. Return on assets and equity were at 0.95% and 5.2% at end-September, respectively. 

“We are optimistic on the improvements in the economic and health data over the past few weeks and the subsequent steps taken to open the economy,” Security Bank President & Chief Executive Officer Sanjiv Vohra said in a statement. 

“The bank is well positioned to support our clients as they recover from the pandemic impact,” Mr. Vohra said. 

Security Bank’s net interest income dropped 8.4% year on year to P6.915 billion in the third quarter from P7.55 billion. 

The lender’s other income also declined 67% to P2.214 billion in the third quarter from P6.814 billion a year earlier. This was mainly due to trading losses, which offset its higher fee income. 

This brought Security Bank’s total operating income to P9.129 billion in the third quarter, down by 36.4% year on year from P14.365 billion.  

Meanwhile, the bank’s total operating expenses in the third quarter dropped 53.8% year on year to P7.043 billion from P15.249 billion. 

Security Bank’s provisions for credit losses decreased 83.6% to P1.649 billion from P10.075 billion a year ago. For the first nine months of 2021, it set aside P4.089 billion, down by 80.5% from the P21.059 billion a year earlier. 

Gross loans slipped 1% year on year to P449 billion as of end-September. This was mainly due to the 12% decline in retail loans, which was partially offset by the 3% increase in wholesale borrowings.  

The bank’s gross non-performing loan (NPL) ratio stood at 4.15% as of end-September, while NPL reserve cover was at 91%.  

Meanwhile, total deposits inched up 20% year on year to P522 billion as of end-September, backed by the growth in low-cost savings and demand-deposit which rose by 24%, as well as the 24% rise in high-cost deposits. 

Security Bank’s capital adequacy ratio and common equity Tier 1 ratio improved to 20.1% and 19.5% as of September from 19.9% and 19%, respectively. 

Total assets stood at P699 billion as of end-September.  

The bank’s shares closed at P122 apiece on Friday, up by 50 centavos or by 0.41%. — L.W.T. Noble