November 05, 2014

SECB nets P6.4b in 9M14

In a disclosure to the Exchange, Security Bank (SECB, Buy) said that its net income grew 54% YoY to P6.4b in 9M14. This translates to 20% RoE and 2.3% RoA. Net interest income for the period increased 37% YoY to P8.5b, while net interest margin was at 3.4%, slightly lower than 3.47% in 2Q14. The growth in net interest income was driven by the 25% growth in loans (to P181b), 26% growth in deposits (to P232b) and 33% growth in assets (to P366b).

Core revenues, which exclude trading gains, grew 27% to P10.2b, while trading gains came in at P3.6b, up 89% YoY. Operating income reached P13.5b, 41% higher YoY. Operating expense grew by 13%, resulting to a cost-to-income ratio of 42%. The bank’s net NPL ratio continued to remain low at 0.21%, while NPL cover came in at 212%. Its Capital Adequacy Ratio (CAR) came in at 18.5% from 14% in 2Q14 after it issued P10b in Tier 2 notes, while its Common Equity Tier 1 (CET1) Ratio came in at 14.3% vs. 13.2% in 2Q14.

Our take: We note of the successive growth in quarterly earnings which came in at P2.8b in 3Q14 vs. P2.2b in 2Q14 and P1.4b in 1Q14. The bank’s 3Q14 results were particularly buoyed by the booking of P1.9b in trading gains. In this light, SECB’sresults have already exceeded full-year consensus estimates of P6.3b. – WealthSec