01 March 2023, Makati City, Philippines – Security Bank Corporation (PSE: SECB) posted a 53% increase in net income to PHP10.6 billion in 2022, driven by growth in core businesses, lower credit provisions and normalized income tax provisions.
Total revenues grew 8% year-on-year to PHP39.6 billion. Net interest income increased 7% to PHP29.2 billion. Net interest margin for the full year was 4.23%, lower compared to 4.43% in 2021. Total non-interest income increased 11% to PHP10.4 billion. Service charges, fees and commissions grew 17% to PHP5.3 billion, led by increase in fees from credit cards, deposits and capital markets. Other non-interest income excluding securities trading gains and fee income rose 40% to PHP5.1 billion, driven mainly by foreign exchange income, recovery on charged-off assets and profits from assets sold.
Operating expense was 8% higher, driven by investments in manpower and technology. Cost-to-income ratio was 57.8%, same level as in 2021.
Pre-provision operating profit was PHP16.7 billion, up 8% year-on-year. The Bank set aside PHP2.8 billion as provisions for credit and impairment losses in 2022, a 46% decrease versus year-ago level of PHP5.3 billion. Gross non-performing loan ratio decreased to 2.95% from 3.94% in previous year. NPL reserve cover increased to 101% from 93% in previous year.
Return on assets increased to 1.37% from 1.02% a year ago. Return on shareholders’ equity increased to 8.42% from 5.57% a year ago.
Quarterly Results: For the period October 1 to December 31, 2022, net income was PHP2 billion. Fourth quarter revenues increased 9% year-on-year to PHP10.2 billion, boosted by non-interest income which grew 26%. The growth in non-interest income was driven by foreign exchange income, profits from assets sold, and recovery on charged-off assets. Pre-provision operating profit for the quarter was PHP3.9 billion, up 2% year-on-year. The Bank set aside PHP1.2 billion as provisions for credit and impairment losses in Q4-2022.
Balance sheet remains strong
Low-cost savings and demand deposits grew 10% year-on-year and account for 58% of total deposits. Time deposits grew 34%. Total deposits grew 16% to PHP606 billion.
Net loans increased 12% year-on-year to PHP503 billion, driven by both wholesale loans which grew 10% and retail loans which accelerated to 16% growth. The growth in retail loans was driven by home loans, which grew 21%, and credit cards, which rose 34%. On a sequential quarter-on-quarter basis, net loans increased by 4%, with retail loans up 5% and wholesale loans up 4%. Retail loans are 24% of total loans, up from 23% a year ago. Total investment securities grew 73% year-on-year to PHP190 billion. As of year-end 2022, total earning assets were up 21% year-on-year.
Security Bank continues to be among the country’s best capitalized private domestic universal banks. Common Equity Tier 1 Ratio was 16.1% and Total Capital Adequacy Ratio (CAR) was 16.6%. Total assets increased to PHP842 billion, up 20% year-on-year. Shareholders’ capital was at PHP126 billion.
“We are encouraged by the underlying growth of the economy as it reopens and rebuilds. Our strong performance for 2022 reflects the fact that Security Bank is fully engaged to support our retail, wholesale, and SME clients. We will sustain that intensity for 2023 as we help clients navigate the current inflationary environment and geopolitical uncertainties.” — Security Bank President & CEO, Sanjiv Vohra.
