INVESTORS took positions on Security Bank Corp. last week after the release of its first-quarter earnings report.

A total of 2.19 million of the bank’s shares worth P225.73 million exchanged hands on the trading floor from April 27 to 30, according to data from the Philippine Stock Exchange.

Week-on-week, its share price inched up by 1.4% to P103.40 per share on Thursday from its April 24 closing price of P102 apiece. Since the start of the year, the bank’s share price has fallen by 44.6%.

Local financial markets were closed on May 1 in observance of the Labor Day holiday.

Piper Chaucer E. Tan, client engagement officer and research associate at Philstocks Financial, Inc., said market activity towards the stock had suddenly increased because of anticipation on earnings.

“[T]he fact the market has not [been] going below P100 I think it’s a sign that the market has already priced in the negative sentiment towards the stock and this [is] also an indication that bulls are in control since the stock is relatively cheap versus its peers,” he said via e-mail.

He noted that the Security Bank stock is relatively cheap since its price-to-earnings ratio is at its 10-year low and its price-to-book value is below its five-year average.

Mr. Tan said investors are optimistic towards earnings season and based on observation, share prices tend to increase during the reporting season or the announcement of earnings of a particular listed company.

Pia Teresa T. Magalong, equity analyst at Regina Capital Development Corp., said the banking sector, in general, was trading below fair value, partly because of low trading volumes amid the coronavirus disease 2019 pandemic.

“Headwinds to the sector include, weakened asset quality due to deterioration in debt payment capacity of borrowers,” she said in a separate e-mail response to questions.

In a disclosure on Tuesday, Security Bank reported its net profit growing by 21% year-on-year to P2.9 billion for the first three months of the year.

Riding on the back of core business income and securities trading gains, total revenues of the bank jumped 75% to P13.2 billion.

Ms. Magalong pointed out that Security Bank changed its revenue mix in favor of net interest income over trading income.

“The key driver of this shift has been a stark increase in retail loans, which comprise 29% of loans. The business model shift provides higher earnings, which may lead to higher multiples vs. peers,” she said.

The bank’s total net interest income was recorded at P8.1 billion in the first quarter, up 41% from the previous year.

Total non-interest income climbed 184% to P5.1 billion. Securities trading gains reached P3.5 billion, five times higher than P671 million in the previous year.

Mr. Tan said the first-quarter earnings had not taken into account the full extent of the enhanced community quarantine. He said those numbers would reflect on second-quarter results since the lockdown was implemented 15 days before the end of the quarter.

Meanwhile, Ms. Magalong forecast Security Bank’s bottom line finishing the year roughly around P9.95 billion because of the disruptions brought about by the pandemic. If realized, this will be lower by 1.5% from the P10.10-billion net income recorded last year.

For this week’s trading, Mr. Tan pegged the stock’s primary support at P100 and its “psychological” secondary support at its 52-week low of P79.30. He placed the initial and secondary resistance at P112.00 and 120.00, respectively.

Ms. Magalong gave Security Bank’s support and resistance price levels at P101.02 and P107.90, respectively. — J. E. Hernandez