Security Bank Corp. expects to continue the growth trajectory of its various loans amid the improving environment.
Eduardo Olbes, Security Bank chief finance officer, said this could drive the bank to post record earnings.
“The bank for the first nine months has done quite well. The momentum is quite encouraging because the demand for both retail and MSE (medium and small enterprise) loans continue to remain strong,” he said.
“On the corporate side, the demand is stronger than what we had expected early in the year. So overall, our total loans are growing faster than expected,” he added.
Olbes noted the growth in the bank’s retail and MSE loans at about “north of 30 percent,” while corporate loans grew approximately 14 percent for the first nine months of the year, higher than the initial guidance of mid-teens for the retail and MSE loans and single-digit growth for the corporate loans.
“We are in the process now of setting our budgets for next year. We intend to refresh our guidance in terms of next year, probably around the late January or early February timeframe… assuming there’s no macro change, we’ll continue to grow more or less the way we’re growing this year, maybe slightly, slightly less,” Olbes said.
At present, the retail loan — home loans, auto loans and credit card — comprises approximately 29 percent of the lender’s loan books, Olbes added.
“And that is the fastest growing part of the bank,” he said.
Loans to MSE — companies that have revenues of less than P150 million — comprise 3 percent of the loan book. It grew by 60 percent in the first nine months of the year.
“So those are the two areas where the growth is quite rapid and we’ve seen that strength throughout the first three quarters and so we expect that momentum to continue through the fourth quarter,” Olbes said.
Olbes however noted the tight competition for corporate loans — loans to mid-sized and large companies like PLDT Inc., San Miguel Corp. and Ayala Corp.
He said the loan demand and growth is very much related to the overall gross domestic product growth.
“What we’ve seen is it’s very, very competitive because the loan demand is muted. Many banks are competing, and so the pricing on those loans are going down. What we’re hoping to see is hopefully as the economy grows faster, we hope to see pickup in terms of loan demand,” Olbes said.
Security Bank closed the first nine months of the year with a profit of PP8.5 billion, up 12 percent. Revenue grew by 28 percent to P40 billion
Net interest income increased 31 percent to P32.4 billion. Net interest margin in 9M-2024 remained robust at 4.90 percent. Total non-interest income likewise increased 18 percent year-on-year to P7.6 billion. Service charges, fees and commissions grew 55 percent to P6.7 billion.
Operating expense was 24 percent higher, driven by investments in manpower and technology to accelerate transformation. Cost-to-income ratio was 58.8 percent which is better than the 60.7 percent a year ago.
The bank set aside P5.1 billion as provisions for credit losses in 9M-2024, an increase versus year-ago level of PHP2.6 billion. Gross non-performing loan ratio was 3.08 percent and NPL reserve cover was 79.5 percent.
