SECURITY Bank Corp. (Security Bank) saw its net income increase by 11.4% in the first quarter on growth across its retail, wholesale and micro, small, and medium enterprise (MSME) businesses.

The bank’s net profit stood at P2.63 billion at end-March, up from P2.36 billion in the same period last year, its financial statement disclosed to the stock exchange on Wednesday showed.

“Our results for the first quarter reflect accelerating momentum across our retail, MSME, and wholesale segments,” Security Bank President and Chief Executive Officer Sanjiv Vohra said in a statement.

The bank’s first-quarter performance translated to a return on shareholders’ equity of 7.71%, up from 7.42% a year ago, while return on assets was at 1.2%, up from 1.15%.

Total revenues increased by 27% to P12.5 billion in the first quarter.

Net interest income rose by 43.93% year on year to P10.73 billion from P7.45 billion on the back of higher interest income from loans amid a high rate environment.

Its net interest margin stood at 5.32%.

Meanwhile, Security Bank’s non-interest income stood at P1.8 billion, mainly driven by growth in its earnings from service charges and fees and commissions to P3.1 billion from P1.31 billion.

“Excluding extraordinary items on both revenue and expense, which offset each other, normalized net income would be largely unchanged,” it said.

Pre-provision operating profit increased by 34% to P4.9 billion.

As a result, the bank’s total operating income grew by 27.36% year on year to P12.48 billion as of March from P9.8 billion.

Meanwhile, operating expenses increased by 35.21% to P9.11 billion in the first quarter from P6.74 billion amid sustained investments in manpower and technology to accelerate its transformation, Security Bank said.

This led to a cost-to-income ratio of 60.74%, lower than the 62.55% a year ago.

Net loans increased by 12% year on year to P545.29 billion as of March, driven by retail and MSME loans, which rose by 32% year on year. Wholesale loans also climbed by 4%.

“The growth in retail and MSME loans was driven by home loans which increased 18% year-on-year, auto loans which rose 46%, credit cards which grew 49%, and MSME loans which grew 74%,” Security Bank said.

The lender set aside P1.5 billion in provisions for credit losses in the quarter.

Its gross nonperforming loan (NPL) ratio stood at 3.4%, while NPL reserve cover was at 81%.

On the funding side, total deposits rose by 22% year on year to P638 billion as the bank’s low-cost current and savings account or CASA deposits increased by 6%, making up 56% of the total.

Its loan-to-deposit ratio stood at 85.42% as of March.

Security Bank’s total assets grew by 1.8% to P887.18 billion at end-March from P871.51 billion at end-2023 and also up by 12% year on year. Total equity inched up by 0.33% to P136.57 billion from P136.13 billion the quarter prior, also rising by 6% from the previous year.

Its common equity Tier 1 ratio was at 14.4%, while its total capital adequacy ratio stood at 15.25%. The bank also recorded a liquidity coverage ratio of 184% and a net stable funding ratio of 131%.

Security Bank’s shares closed unchanged at P70.50 apiece on Wednesday. — A.M.C. Sy