Tuesday, 18 August 2009

Security Bank’s second-quarter profit up 41%

Erik de la Cruz
Business Mirror

MIDSIZED Security Bank Corp. clocked a net income of P655.3 million for the second quarter, up 41 percent over P465.6 million in the same period last year and bringing the first-half bottom line higher by 8 percent at P1.4 billion.

The first-half profit translates to an annualized return on average equity (ROE), a measure of profitability, to 20.76 percent compared with 22.0 percent for the same period last year but better than the full-year ratio of 19.23 percent for 2008.

The bank recorded the highest ROE of 22.31 percent in the first quarter among the more than 30 regular and expanded commercial banks in the country, based on figures from the central bank.

With the surge in loans, the bank on Monday said its net interest income improved by 24 percent to P2.9 billion. This resulted in an increase in net interest margin to 4.3 percent from last year’s 3.9 percent.

Noninterest income dropped 11.5 percent to P1.0 billion, reflecting an across-the-board slowdown amid weak income from service charges and fees and foreign-exchange gains.

“Our focus on building our core business while prudently managing risks in our earnings stream has been successful. Our sound balance sheet gives us the leverage to explore different opportunities,” president and chief executive Alberto Villarosa said.

The bank is looking to raise up to P2.5 billion in Tier 1, or core capital, by selling new common shares to certain eligible shareholders. Proceeds will be used for strategic growth initiatives, such as expanding the client base and offering new and higher-value products.

The extra capital will boost its Tier 1 capital adequacy ratio (CAR)—a measure of capital against risk-weighted credit exposures—from 11.29 percent recorded as of end-June, which was still above the minimum regulatory requirement of 10 percent.

Its total CAR, which takes into account Tier 2, or supplementary capital, stood at 14.5 percent as of end-June even after having called P3 billion of its outstanding Tier 2 notes in the first quarter.

A higher CAR will allow the bank to absorb more risks through lending. It previously said it was looking to expand its loan portfolio by 10 percent this year.

Provisions set aside for credit and impairment losses amounted to P251 million for the first six months, P153 million or 37.9 percent lower than the P404.0 million for the comparative period last year.

“The provisions for the year represent the regular buildup of provisions for loans and receivables as a continuing effort to strengthen the bank’s balance sheet in support of the growth in the loan portfolio rather than due to portfolio quality deterioration,” the bank said in notes accompanying its results.

This further strengthened the bank’s nonperforming loans (NPLs) cover to 306 percent as of June from 298 percent 12 months before. Its NPL ratio was flat at 1.4 percent.

“While signs of a global economic recovery still appear tentative, we maintain our guarded optimism for the country and the bank,” Villarosa said in a statement.

The bank ended the first half with P140 billion in total assets, registering a P2.2-billion or 1.6-percent growth from end-2008.

Chief financial officer Carlos Borromeo said the 21-percent increase in the loan portfolio showed the bank’s steady shift in asset allocation from government securities. Loans now account for 47.4 percent of total assets compared with 43.0 percent a year before, he said.

Partly owned by the Social Security System and brokerage firm Asiasec Equities Inc., the bank is controlled by the Dy family, who has a 40-percent stake.

Shares in Security Bank closed steady at P44 on Monday.

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