SECURITY BANK Corp. booked a higher net income in the first quarter, backed by stronger revenues due to the growth in its core business.
The bank’s net profit climbed 21% year on year to P2.9 billion, it said in a disclosure on Tuesday.
Revenues surged by 75% to P13.2 billion on the back of sustained growth in core business income and securities trading gains. Excluding trading gains, total revenues climbed 41% to P9.7 billion.
Net interest income hit P8.1 billion in the first three months of the year, increasing 41% from the year-ago level. The bank’s net interest margin went up to 4.68% during the period, improving by 129 basis points (bps) year on year.
Total non-interest income surged 184% to P5.1 billion. Securities trading gains hit P3.5 billion, 420% higher than P671 million a year ago.
The lender’s pre-provision operating profit increased 129% to P8 billion in the first quarter. However, the bank allocated P5.7 billion for loan provisions during the period, higher by 35% compared to the P4.2 billion in provisions for credit losses a year ago.
“Factors impacting the increase in provisions in Q1 2020 included: credit model refinements reflecting the bank’s views on the current environment, headwinds in consumer and commercial lending, and the change in the loan mix towards more consumer loans,” Security Bank said.
Meanwhile, operating expenses rose 28% on the back of manpower and costs from its business expansion. Despite this, cost-to-income ratio stood at 39.4%, better than the 53.7% seen a year ago.
The bank’s loan portfolio increased by 14% to P468 billion. Retail loans, which made up 29% of the total, expanded by 44%. Wholesale loans also rose 6%.
Gross nonperforming loan (NPL) ratio stood at 1.59%. NPL reserve cover was at 128%, coming from the 186% seen in the first quarter of 2019.
Total deposits went up 9% year-on-year to P503 billion during the quarter. The period saw low-cost deposits — which accounted for 48% of the total (from 40% a year ago) — grow by 30%.
Return on shareholders’ equity stood at 9.8%, up 112 bps from the 8.6% logged in January to March 2019. Meanwhile, return on assets inched up by 23 bps to 1.46%.
The bank’s common equity Tier 1 ratio was at 16.5% in the quarter, unchanged from the year-ago level. Meanwhile, its capital adequacy ratio stood at 17.6% from the 19% the prior year.
Security Bank’s total assets rose three percent to P783 billion.
Shareholders’ capital also went up 7% to P119 billion.
Amid the risks arising from the coronavirus disease 2019 (COVID-19) pandemic, Security Bank said it has initiated portfolio reviews, reassessed its provisioning and intensified client management.
“We enter this period of challenge arising from the COVID-19 pandemic with a strong balance sheet and healthy liquidity and capital positions,” Security Bank President and Chief Executive Officer Sanjiv Vohra said in a statement.
The lender’s shares finished trading at P102 apiece on Tuesday, up by 1.49% or P1.50 from its previous close. — Luz Wendy T. Noble