Security Bank profit down 27%
SECURITY BANK Corp. saw its net income drop by 26.7% last year as it hiked its loan loss provisions to manage risks amid the coronavirus pandemic, the lender told the local bourse on Tuesday.
The bank’s net profit went down to P7.4 billion in 2020 from P10.1 billion it logged a year ago, based on its financial statement for 2019.
Return on shareholders’ equity was 6.16%. while return on assets was at 1.03%.
It set aside P26.4 billion as provisions for an anticipated surge in credit losses last year or over six times as much as the P4.2 billion recorded in 2019.
The lender said it set aside more loan loss reserves in 2020 on expectations that nonperforming assets would surge amid a pandemic-induced economic recession.
Security Bank’s net interest income went up by 14.2% to P30.65 billion last year from P26.84 billion in 2019. It booked a net interest margin of 4.77%, up from 3.93% the year prior.
Its loan portfolio inched up by 1.5% to P456.244 billion from P449.525 billion as retail loans went down by 10% while wholesale loans inched up by three percent.
Security Bank’s gross nonperforming loan (NPL) ratio climbed to 1.97% in 2020 from 0.56% in 2019. Its NPL reserve cover was at 115.47% last year, down from 129.2% previously.
Total revenues, meanwhile, jumped by 48% year on year to P50.4 billion.
On the funding side, the bank’s total deposit liabilities went down 12% to P440.41 billion from P499.61 billion a year ago due to reduced time deposits.
Low-cost savings and demand deposits grew 19% and increased to 60% of total deposits, up from 45% a year ago. High-cost deposits decreased 37%.
Non-interest income also rose by 178% to P19.723 billion from P7.105 billion in 2019 driven by strong gains in securities trading which surged 793% year on year to P13.4 billion in 2020.
It also reported a 249% increase (to P1.7 billion) in miscellaneous income after it sold 50% of its consumer finance arm SB Finance, Inc. to Thailand-based Bank of Ayudhya Public Co. Ltd. (Krungsri) in October 2020.
Meanwhile, income from service charges, gees and commissions went down by 11.1% year on year due to fewer transactions.
Operating expenses inched up by 13.5% to P19.7 billion. Still, its cost-to-income ratio improved to 39.1% from 51.1% a year ago.
The bank’s capital adequacy ratio ended higher at 20.09% last year from 17.88% in 2019, showing that its buffers can support the current level of its risk assets, Security Bank said. The ratio was higher than the 10% minimum requirement of the central bank and 8% based on global standards.
Meanwhile, its common equity Tier 1 ratio rose to 18.84% from 16.39% the year prior.
However, Security Bank’s assets fell by 17% to P653 billion from P788 billion the year earlier
“Our 2020 results reflect the fundamental strength of Security Bank amidst a very challenging pandemic-impacted environment. Our retail and wholesale teams maintained their steadfast support of our core clients. Our financial markets team nimbly navigated significant market movements. We supported our employees through the necessary operating model pivots as well as fortified the Bank’s balance sheet with credit provisions,” Security Bank President & CEO Sanjiv Vohra said in a statement on Tuesday.
Security Bank has a total of 313 branches and 787 automated teller machines to date.
Shares in Security Bank went up by three centavos or by 2.31% to close at P133 each on Tuesday. — B.M. Laforga
