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Security Bank suffered a 63.9 percent year-on-year drop in third-quarter net profits to 1 billion pesos as the lender increased provisions for likely credit losses amid the prolonged coronavirus pandemic.
This brought the bank’s nine-month net profit to P6.7 billion, a drop of 12.9 percent year-on-year, according to a regulatory filing.
For the third quarter alone, Security Bank set aside P10 billion in an additional buffer for credit losses, compared to just P1.1 billion in the same period last year. This brought the nine-month loan loss provisions to 21.1 billion pesos, a dozen times more than the buffer in the same period last year.
With this level of provisions, the bank has reserved P1.22 cents for each peso of bad loans.
Citing the challenges stemming from the pandemic and the resulting economic impact, Security Bank’s bad loans rose to 4.03 percent of total loans at the end of September from 1.58 percent at the end of June.
“While revenues, margins and capital are resilient, the bank has maintained proactive loan provisioning given the economic challenges stemming from the pandemic. We prudently support our clients, continue to monitor risk management and invest in initiatives to strengthen our services, ”said Security Bank President and CEO Sanjiv Vohra.
Before provisioning for expenses, the bank’s operating profit soared 120 percent year-on-year to P24.8 billion in the first nine months due to higher interest and business gains. In the third quarter alone, pre-provisioning operating profit also increased 120 percent year-on-year to P9.2 billion.
Security Bank spent just 38.4 cents to gain each peso in the first nine months, more efficient than the 53.3 cents it spent to gain each peso a year ago.
Total net interest income for the nine-month period grew 24 percent year-on-year to P23.4 billion. For the third quarter, total net interest income increased 8 percent year-on-year to P7.6 billion.
The bank’s net interest margin increased 88 basis points yoy and 26 basis points qoq to 4.9 percent in the third quarter.
Total loans stood at 431 billion pesos, a fall of 3 percent year-on-year and 4 percent quarter-on-quarter. Retail lending increased 2 percent year-on-year, representing 26 percent of total loans. Wholesale loans were flat compared to the prior year level.
On the other hand, charges, fees and commissions for nine-month services fell 10 percent year-on-year to P2.6 billion.
—DORIS DUMLAO-ABADILLA
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