Security Bank Corp., the sixth-largest lender in terms of assets, said Monday net income in the third quarter rose 5 percent to P2.25 billion from a year ago, on the back of the continued expansion of consumer loans and low-cost deposits.
Security Bank said in a statement net profit in July to September was also 15-percent higher than what it earned in the second quarter this year.
Consumer loans in the third quarter grew 48 percent year-on-year, while low-cost deposits increased 18 percent.
“Total loan growth moderated to 8 percent as wholesale loans slowed to +2 percent. Excluding a large short-term corporate bridge loan in Q3-2017, wholesale loans would have grown 9 percent and total loans, 15 percent,” it said. Total loans s reached P401 billion.
Consumer loans now account for 19 percent of total loans, up from 14 percent a year ago. Total deposits improved 9 percent to P468 billion, with high-cost deposits inching up 3 percent.
Net interest income from customer loans and deposits increased 23 percent year-on-year in the third quarter. Net interest spread on loans and deposits climbed to 4.43 percent in the third quarter, up by 16 basis points quarter-on-quarter and up by 11 basis points year-on-year.
Service charges, fees and commissions grew 38 percent, driven by bancassurance, credit card, deposit charges and loan fees.
Operating expense growth (excluding provisions for credit and impairment losses) was 13 percent. Provision for income tax for the quarter was higher by 118 percent or P345 million due to growth in income from regular banking unit.
Net income declined 11 percent in the first nine months to P6.5 billion, primarily due to the 57-percent decrease in trading gains or P627 million and the increase in provision for income tax by 73 percent or P769 million.
Net interest income from customer loans and deposits increased by 30 percent or P2.6 billion to P11.3 billion. Interest income from financial investments was lower by 13 percent or P1.1 billion due to a lower level of securities portfolio which decreased by 18 percent year-on-year.
Total net interest income grew 7 percent to P15.3 billion. Overall, net interest margin increased to 3.3 percent in Q3-2018, up by 11 basis points quarter-on-quarter and up by 7 basis points year-on-year.
Service charges, fees and commissions in the nine-month period increased by 23 percent to P1.98 billion. Operating expense growth was 13 percent (excluding provisions for credit and impairment losses). Cost-to-income ratio was 54 percent.
Asset quality remained healthy, with gross non-performing loan ratio at 0.7 percent. Provision for credit losses was P227 million for the nine-month period.
NPL reserve cover was 120 percent, computed using the new BSP Circular 1011 guidelines on loan loss provisions which the bank adopted in September 2018.
Common Equity Tier 1 ratio increased to 16.3 percent from 16.2 percent a year ago. Total capital adequacy ratio strengthened to 18.6 percent from 18.5 percent.
Security Bank is among the country’s best capitalized private domestic universal banks.
Return on shareholders’ equity was 8.1 percent. Shareholders’ capital improved to P109 billion, up 6 percent year-on-year. Total assets hit P733 billion.