Security Bank Corporation (PSE: SECB) posted a 100% year-on-year increase in net income to PHP6.2 billion in H1-2022, driven by growth in core businesses, lower credit provisions and normalized income tax provisions.
Net interest income increased 6% to PHP14.4 billion. Total non-interest income was at PHP4.8 billion. Service charges, fees and commissions grew 22% to PHP2.6 billion, led by increase in fees from deposits, credit cards and capital markets. Other non-interest income excluding securities trading gains and fee income rose 47% to PHP2.2 billion, driven mainly by foreign exchange income and recovery on charged-off assets.
Operating expense was 4% higher, driven by investments in technology and manpower to improve customer experience. Cost-to-income ratio was 55.9% compared to 56.4% a year ago.
Pre-provision operating profit was PHP8.5 billion, up 6% year-on-year. The Bank set aside PHP408 million as provisions for credit losses in H1-2022, a decrease versus year-ago level of PHP2.4 billion. Gross nonperforming loan ratio decreased to 3.28% from 3.65% in previous quarter. NPL reserve cover increased to 92% from 90% in previous quarter.
Return on assets increased to 1.70% from 0.92% in H1-2021. Return on shareholders’ equity increased to 10.0% from 5.05% a year ago.
Quarterly Results: For the period April 1 to June 30, 2022, net income was PHP3.5 billion, 139% higher than year-ago level and 29% higher than quarter-ago level. On a sequential quarter-on-quarter basis, total revenues increased 7% to PHP10.0 billion. Net interest income grew 7% to PHP7.5 billion. Net interest margin in Q2-2022 was 4.36%, up 3 basis points quarter-on-quarter and up 7 basis points year-on-year. Total non-interest income increased 7% to PHP2.5 billion. Service charges, fees and commissions grew 2% to PHP1.3 billion. Other non-interest income excluding securities trading gains and fee income rose 17% to PHP1.2 billion.
Operating expense in Q2-2022 was 4% lower versus quarter-ago.
Pre-provision operating profit in Q2-2022 was PHP4.7 billion, 23% higher than quarter-ago level. In Q2-2022, the Bank set aside PHP328 million as provisions for credit losses.
Balance sheet remains strong
Low-cost savings and demand deposits grew 18% and increased to 59% of total deposits from 55% a year ago. This drove total deposits to grow 9% year-on-year to PHP569 billion.
Net loans increased 15% year-on-year to PHP490 billion, driven by wholesale loans which grew 18% and retail loans which grew 6%. Retail loans are 23% of total loans compared to 26% a year ago.
On a sequential quarter-on-quarter basis, net loans grew 5% with both wholesale and retail loans increasing by 6% and 4%, respectively. Low-cost savings and demand deposits increased by 4% and total deposits grew by 7%.
Security Bank continues to be among the country’s best capitalized private domestic universal banks. Common Equity Tier 1 Ratio was 16.7% and Total Capital Adequacy Ratio (CAR) was 17.2%. Total assets increased to PHP766 billion, up 9% year-on-year. Shareholders’ capital was at PHP124 billion.
“We are very pleased by the continued improvement in our core businesses. Our growth in loans and investment securities, is a tangible manifestation of our commitment to clients to support the reopening of the economy and address the impact of inflation.” — Security Bank President & CEO, Sanjiv Vohra.