Security Bank Corporation reported a 13.74 percent drop in net income to P9.1 billion last year from the P10.55 billion earned in 2022 mainly due to higher expenses and provisions for credit card losses.

In a disclosure to the Philippine Stock Exchange (PSE), the bank said its total revenues improved 8 percent year-on-year to P43.0 billion as net interest income increased 19 percent to P34.7 billion. Net interest margin for the full year was 4.49 percent, higher compared to 4.23 percent in 2022. 

Total non-interest income was at P8.2 billion. Service charges, fees and commissions grew 15 percent to PP6.1 billion, led by increase in fees from credit cards, remittances which include InstaPay fees, and bancassurance.

“The economy is adjusting to moderating levels of inflation and continued elevated interest rates. Our growth for 2023 in both loans and deposits was evident across our retail and SME segments,” said Security Bank President and CEO Sanjiv Vohra. 

He added that “in turn, our wholesale teams successfully secured key mandates to support client growth initiatives. We will accelerate that growth in 2024 and continue to deliver on our Transformation goals.”

Operating expense was 14 percent higher, driven by investments in manpower and technology. Cost-to-income ratio was 60.8 percent, higher than the 57.8 percent in 2022.

Pre-provision operating profit was P16.9 billion, up one percent year-on-year. The bank set aside P4.8 billion as provisions for credit and impairment losses in 2023, a 69 percent increase versus year-ago level of P2.8 billion given impacts from provisions releases in 2022 and elevated costs for credit cards in 2023. 

Gross non-performing loan (NPL) ratio was 3.36 percent and NPL reserve cover was 82 percent. Return on shareholders’ equity was 6.95 percent while return on assets was 1.06 percent.

CASA deposits increased four percent year-on-year and CASA as percent of total deposits was at 60 percent, up from 58 percent a year ago. Total deposits were at P607 billion.

Net loans increased to P538 billion, up seven percent year-on-year as retail and MSME loans combined accelerated to 29 percent growth rate year-on-year from the 16 percent growth posted in 2022. Wholesale loans were same as year-ago level. 

The growth in retail and MSME loans was driven by home loans which grew 18 percent year-on-year, credit cards which rose 44 percent, auto loans which grew 36 percent, and MSME loans which grew 77 percent.