Security Bank Corp., the sixth largest lender in terms of assets, said net income fell 16.6 percent in the first quarter to P2.35 billion from a year ago, on lower trading gains and higher taxes.
The bank said in a statement the lower net profit in the first three months was “primarily due to the decrease in trading gains by 50 percent or P416 million and the increase in provision for income tax by P311 million.”
Security Bank said core revenues, comprising of net interest income, fee-based income and trading gains attributable to customer flows, rose 15 percent or P797 million.
Net interest income grew 13 percent to P5 billion as the underlying customer business remained strong, with net interest income from customer loans and deposits increasing 43 percent to P3.6 billion.
Interest income from financial investments decreased as the bank reduced its securities portfolio by 11 percent year-on-year through securities sale.
Service charges, fees and commissions rose 45 percent to P683 million. The growth in fee income was broad-based, led by bancassurance, credit card and loan fees.
Loans increased 20 percent year-on-year to P367 billion. Corporate loan growth was 16 percent while the middle-market loan increase was 13 percent. Consumer loans surged 54 percent year-on-year.
“With the rollout of small business loans and personal loans in early 2017, Security Bank now has a full plate of consumer loan products consisting of home, auto, credit card, personal and small business loans, which helped net interest margin to be sustained at 3.3 percent in Q1 2018. This is higher than the 3.1 percent a year ago and same level as quarter ago. Consumer loans as a percent of total loans increased to 17 percent,” the bank said.
Deposits grew 11 percent year-on-year to P420 billion. Low-cost deposits increased 20 percent.
Total assets reached P703 billion. Asset quality remained healthy, with gross non-performing loan ratio at 0.7 percent, lower than 0.9 percent a year ago. The net NPL ratio was 0.27 percent while the NPL reserve cover increased to 269 percent.
Operating expenses rose 14 percent, excluding provisions for credit and impairment losses. The bank’s manpower climbed to 5,500 in as of March, supporting the growth in consumer finance, branches, digitalization and information technology transformation to serve the bank’s client base better.
Security Bank said capital position was stronger, with common equity tier 1 ratio at 16.5 percent and total capital adequacy ratio at 18.8 percent, an improvement from 15.5 percent and 17.7 percent, respectively, in the previous quarter.
Security Bank said it remained the best capitalized bank with the highest capital adequacy ratios among the top 10 private domestic universal banks in the country by total assets.
Return on shareholders’ equity was 8.9 percent. Shareholders’ capital was P106 billion, up by 6 percent from a year ago.