By Karl Angelo N. Vidal, Reporter
SECURITY BANK Corp. expects its loan growth to slow down this year due to high base effects after its rapid retail loan growth in 2017.
In a business matching event in Makati City, Security Bank said it projects slower loan growth this year following “stronger than expected” lending performance in 2017.
“We don’t give our targets, but I think the loan growth this year will be lower than last year,” Security Bank President and Chief Executive Officer Alfonso L. Salcedo, Jr. said on Wednesday.
“For one thing, our loan growth last year was very strong. It was at 28%.”
Mr. Salcedo said the lender’s loan growth last year was mainly supported by the corporate segment, which he considers as lumpy.
“When you look at the industry, a lot of the loan growth is driven at the top, at the conglomerate segment because those are the lumpy ones. Those have timing effects because if they don’t need it, they don’t.”
To temper slower growth in loans this year, the bank said it will be looking at the retail and middle market segments of its loan book as it is “more sustainable.”
“This year is a bit different, but we’re looking at the retail and middle markets because that’s more sustainable,” Mr. Salcedo said, adding that retail loans yield more margins compared with the corporate ones.
According to the bank, 17% of its loan portfolio goes to the retail segment and another 34% is from the middle market.
Amid expectations of slower total loan growth this year, Mr. Salcedo said its retail lending segment continues to expand.
“It’s growing very fast. The latest number that we have, it’s growing close to 50% year to date,” Mr. Salcedo said, comparing the figure with the same period in 2017.
Eduardo M. Olbes, executive vice-president at Security Bank, said its retail lending growth was led by its car loan business.
“In Security Bank’s case, [our car loan growth continues to grow] is because opened new channels to be able to serve our clients,” Mr. Olbes said.
“Our go-to market strategy changed. We have new channels which were not previously serving which is the dealer channel.”
Mr. Salcedo added that loans for small enterprises also supported the growth of its retail business.
LTNCD
Meanwhile, Security Bank said it may offer the third and final tranche of its P20-billion long-term negotiable certificates of deposit (LTNCD) program within the year.
“We’ll probably have one more [tranche] before the end of the year, Mr. Salcedo said. “I think we have got [approximately] P6 billion to go.”
The bank was authorized by the central bank to raise up to P20 billion in peso-denominated notes. The first tranche was conducted last year, raising P8.6 billion in November. Another P5.8 billion was raised in May, above the initial P5 billion it intended to offer.
LTNCDs are similar to regular time deposits which offer higher interest rates. However these cannot be pre-terminated. Being “negotiable” means these can be sold at the secondary market prior to maturity date.
Security Bank’s net income stood at P2.35 billion in the first quarter, down 16.6% Shares in the bank gained 20 centavos or 0.10% to close at P203 apiece yesterday.

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