Security Bank Corp., the sixth-largest lender in terms of assets, said net income in 2018 declined 16.5 percent to P8.6 billion from P10.3 billion a year ago, pulled down by lower trading gains.
The bank said in a disclosure to the stock exchange Thursday a key component of its earnings was net interest income from customer loans and deposits, which increased by 30 percent or P3.6 billion to P15.7 billion.
“This was driven by the continued expansion of consumer loans and low-cost deposits. Consumer loans grew 47 percent while low-cost deposits increased 15 percent. Consumer loans now account for 20 percent of total loans versus 16 percent a year ago,” the bank said.
Total loans increased 12 percent to P416 billion while wholesale loan growth was 7 percent. Total deposits increased 18 percent to P489 billion. The bank’s interest margins continued to improve.
Net interest spread on loans and deposits further increased to 4.72 percent in the fourth quarter, up by 29 basis points quarter-on-quarter and up by 48 basis points year-on-year.
Interest income from financial investments was lower by 11 percent or P1.2 billion mainly due to a lower level of investment securities at amortized cost. Total net interest income rose 7 percent to P20.8 billion. Overall, net interest margin further improved to 3.4 percent in the fourth quarter of 2018, up by 10 basis points quarter-on-quarter and up by 13 basis points year-on-year.
Service charges, fees and commissions increased by 26 percent to P2.9 billion. This was driven by credit card, bancassurance, loan fees and deposit charges.
“The decrease in trading gains by 85 percent or P2 billion and the increase in provision for income tax by 47 percent, or P790 million, primarily accounted for the bank’s lower net income in 2018. Net income was lower by 16 percent or P1.7 billion versus previous year,” it said.
Asset quality remained healthy, with gross non-performing loan ratio at 0.7 percent. Provision for credit losses was P714 million.
NPL reserve cover was 112 percent, computed using the new BSP Circular 1011 guidelines on loan loss provisions which the bank adopted in September 2018.
Security Bank continues to be among the country’s best capitalized private domestic universal banks. Common Equity Tier 1 Ratio increased to 16.4 percent from 15.5 percent a year ago. Total capital adequacy ratio likewise increased to 18.7 percent from 17.7 percent.
