SECURITY BANK Corp. saw its net profit rise in third quarter on the back of interest earnings.

In a disclosure to the Philippine Stock Exchange on Monday, Security Bank said its net income stood at P2.14 billion in the three months ended September, up 21% from the P1.8 billion posted in the same period a year ago.

The third-quarter income brought Security Bank’s nine-month net profit to P7.4 billion, climbing 12% from the P6.6 billion posted a year ago, driven by a 24% increase in net interest income to P14.3 billion. Non-interest income, including trading gains, stood at P3.5 billion in the first nine months, a 15% decrease.

Security Bank’s net interest income continued to be the main driver of the increase in the lender’s bottom line for the third quarter, as it rose 22% to P5 billion in the period.

The rise in the bank’s net interest income was backed by year-on-year growth in loans to P370 billion (up 38%) and deposits to P431 billion (up 44%).

“Low-cost deposits grew 22%. Wholesale loans grew 36%, of which corporate loan growth was 39% and middle market loan growth was 32%. Consumer loans increased 67%. Consumer loans accounted for 14% of total loans. Net interest margin was 3.2% in the third quarter of 2017, same as in previous quarter and higher than the 3.1% at year-end 2016,” the bank said.

Service charges, fees and commissions also rose 2% to P1.6 billion.

Meanwhile, Security Bank’s operating expenses also grew 17%, driven by increased manpower costs due to retail lending, e-commerce platforms, and staffing of new branches.

“19 new branches were opened in the last 12 months from October 2016 to September 2017, inclusive of the 8 new branches opened in the first nine months of this year,” Security Bank said in the statement.

Depreciation and amortization and software costs likewise rose 40% due to the bank’s information technology upgrade and branch network expansion. The cost-to-income ratio was 50.6%.

Still, even as the bank’s lending business continued to grow, asset quality remained strong. Security Bank’s net non-performing loan (NPL) ratio stood at 0.11%, while its NPL reserve cover was at 220%.

The bank’s assets climbed 17% to P796 billion. It also maintained adequate buffers for potential shocks, with its common equity Tier 1 ratio at 16.2% and total capital adequacy ratio at 18%, well above the regulatory minimums.

Security Bank has 298 branches and 694 automated teller machines to date.

In August, the bank collaborated with ANZ Bank in a network extension partnership to help boost the local lender’s banking services.

Shares in Security Bank closed at P252 apiece on Monday, up by P3.20 or 1.29% from Friday’s finish of P248.80 per share. — K.A.N. Vidal

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