Security Bank Corp., the seventh-largest lender in terms of assets, may see its capital strength diminish over the next one to two years because of record-high credit costs, global credit watchdog S&P Global Ratings said Tuesday.
S&P said in a report the bank’s performance in the third quarter was worse than expected because of its continuously elevated credit costs amid high COVID-19 infection rates in the country.
The bank’s provisioning costs jumped to P10 billion in the third quarter from P1.1 billion a year ago. Credit costs in the first nine months rose multifold to P21 billion from P1.75 billion in the same period last year, it said.
Security Bank’s annualized credit costs increased to a hefty 600 basis points (bps) for 2020 from 91 bps in 2019, according to the debt watcher.
“This level of credit costs is significantly higher than industry peers’, with annualized industry credit costs of 180 bps for the first nine months,” S&P said.