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Tag: Security Bank

  • Security Bank focuses on digitalization

    Security Bank focuses on digitalization

    During the annual stockholders’ meeting of Security Bank Corporation (PSE: SECB) on Tuesday, 24 April 2018, the following were elected to the Security Bank Board: incumbent directors Diana P. Aguilar, Philip T. Ang (independent), Anastasia Y. Dy, Frederick Y. Dy, Takayoshi Futae, Joseph R. Higdon (independent), James JK Hung (independent), Ramon R. Jimenez, Jr. (independent), Jikyeong Kang (independent), Napoleon L. Nazareno (independent), Takahiro Onishi, Alfonso L. Salcedo, Jr., Rafael F. Simpao, Jr. and Alberto S. Villarosa, and new director Cirilo P. Noel. During the organizational Board meeting, key appointments were for Frederick Y. Dy as Chairman Emeritus, Alberto S. Villarosa as Chairman, Anastasia Y. Dy as Vice Chairman, and Alfonso L. Salcedo, Jr. as President and Chief Executive Officer.

    In his report on 2017 operations, President and CEO Mr. Alfonso L. Salcedo, Jr. highlighted Security Bank’s 20% earnings growth that resulted in a record-high net income of Php 10.26 billion, versus industry’s 7% earnings growth. In the last five years, Security Bank’s net income grew by a compounded annual growth rate of 20% versus industry’s 3%. The Bank’s revenue growth in 2017 was 20% versus industry’s 11%. Net interest income growth was 22% versus industry’s 17%, while non-interest income growth was 15% versus industry’s 5% decrease. The Bank’s return on shareholders’ equity was 10.2% versus industry’s 9.96%. The Bank’s Core Equity Tier 1 and Total Capital Adequacy ratios of 15.5% and 17.7%, respectively, are among the highest in the industry and well above the minimum regulatory requirements. Total assets grew 9% to Php 757 billion. In the past five years, Security Bank’s total assets grew by a compounded annual growth rate of 21%, versus industry’s 11%.

    Also highlighted was Security Bank’s healthy loan portfolio growth of 28% versus industry’s 19%. The Bank’s loan growth was driven by corporate loans which increased 25%, middle market loans which grew 24%, and consumer loans which expanded 49%. In the past five years, Security Bank’s loan portfolio grew by a compounded annual growth rate of 22% versus industry’s 18%. The Bank’s three customer segments grew by compounded annual growth rates of 18% for corporate loans, 20% for middle market loans, and 63% for retail loans. Retail loans as a percent of total loans increased to 16% at year-end 2017 from 13% in 2016. Security Bank now has a full slate of consumer loan products consisting of home, auto, credit card, personal and small business loans. Asset quality remained healthy with net non-performing loan ratio at 0.02%, a decrease from 0.17% in 2016, and lower than industry’s 0.47%. NPL cover increased to 239%, versus industry’s 150%. Deposit growth was 19%, faster than industry’s 12%. In the last five years, Security Bank’s deposits grew by a compounded annual growth rate of 19% versus industry’s 12%. The Bank added 12 new branches in 2017, bringing its network to 302 branches. Its ATM network has grown from 622 to 713.

    Security Bank maintained its cost-to-income ratio at an efficient 49.8% compared to industry’s 63.3%, even as the Bank continued to invest heavily in information technology, digitalization, people and branches. Mr. Salcedo stated that these investments are designed to transform the Bank’s infrastructure and way of doing business, and ensure that the Bank stays relevant to shifting customer needs in a fast-changing banking and technology landscape. Security Bank continues to be focused on its medium-term strategic goals which are to regain industry-leading ROE, continue growth momentum to build its retail banking business as the third business pillar, and transform the Bank’s infrastructure to support its growth aspirations and deliver its BetterBanking promise. Key to this transformation is the digitalization of its customer acquisition and servicing channels and operational processes. In 2017, Security Bank increased cash dividends to Php 3.00 per share from Php 2.00 in prior years.

    Highlighted in the President’s report were the major awards that Security Bank received, most recently as The Best Retail Bank in the Philippines for 2018 by The Asian Banker and Best Bank in the Philippines by Global Finance. Mr. Salcedo stated that the execution and results of Security Bank’s retail banking strategy led to the major breakthrough award as The Best Retail Bank in the Philippines for 2018. In 2017, Security Bank was named Best Bank in the Philippines by Alpha Southeast Asia; Best Bank for SMEs in the Philippines by Asiamoney; and Best Digital Bank in the Philippines by Capital Finance International of London. The Bank also received awards for management excellence, industrial peace and harmony, corporate banking and treasury, brand marketing, product innovation, investor relations, and corporate social responsibility.

  • MUFG to Buy $773 Million Stake in Philippines’ Security Bank

    MUFG to Buy $773 Million Stake in Philippines’ Security Bank

    Mitsubishi UFJ Financial Group, Japan’s biggest bank, agreed to buy a 20 percent stake in Philippine lender Security Bank Corp. for 36.9 billion pesos ($773 million) as it deepens its expansion in Southeast Asia.

    Security Bank accepted MUFG’s offer to buy 150.7 million newly issued common shares at 245 pesos each and 200 million preferred shares at 0.1 peso apiece, the Manila-based bank said in a filing Thursday. That represents an 81 percent premium on Security Bank’s Wednesday closing price of 135 pesos.

    The deal will be the largest equity investment in a Philippine financial institution by a foreign lender, allowing Security Bank to accelerate its growth strategy and expand its branch network, the Manila-based company said. Japan’s biggest lenders have expressed interest in investing in the Philippines after the country loosened its rules on foreign bank ownership in 2014. The nation’s central bank said after the announcement that it welcomes the entry of foreign bank investments.

    “Security Bank will benefit from the deal by having a bigger war chest to execute its strategy,” Charles William Ang, an analyst at COL Financial Group Inc., said by telephone. “The deal is also a sign that foreigners are still very bullish about our banking industry, which remains under-penetrated. There are more opportunities for growth and profit compared with Japan.”

    ‘Right Price’

    Ang said the transaction amount reflects the large size of the stake. MUFG is paying a 78 percent premium to Security Bank’s average price over the past month, the fourth highest among all bank acquisitions in Southeast Asia, according to data compiled by Bloomberg. The price of 245 pesos a share is 2.8 times book value, the data show.

    “People say that it’s expensive, but we believe this is the right price,” Go Watanabe, chief executive officer for Asia-Oceania at MUFG’s main lending unit, said at a briefing in Manila. “We believe this price is fair, calculating the intrinsic or future value of the bank.”

    Shares of Security Bank climbed 6.7 percent, the most since June 2013, to 144 pesos. MUFG dropped 2.4 percent in Tokyo as Asian equities resumed their New Year tumble.

    Second Biggest

    MUFG is comfortable with a 20 percent stake, Watanabe said. The investment will make its Bank of Tokyo-Mitsubishi UFJ Ltd. unit the second-biggest shareholder of Security Bank, behind the Dy family. The deal is expected to close in the middle of the year, and MUFG will appoint two directors to Security Bank’s board, according to the statement.

    Security Bank will target 500 branches by 2020 from the current 262, the company’s President Alfonso Salcedo told reporters. The investment will allow it to tap new markets through MUFG’s relationships with Japanese companies and its global network, according to the statement. Security Bank’s operations range from retail banking to brokerage services and leasing, its website shows.

    Investments by foreign lenders “further reinforce bank capitalization, introduce global best practices and know-how and expand markets,” Bangko Sentral ng Pilpinas Governor Amando Tetangco said in a mobile-phone message. “These also promote more job-creating foreign direct investments.”

    Indonesia and India remain missing parts in MUFG’s expansion in Asia, Watanabe said. The financial group has been expanding in the region as a declining population and near record-low interest rates constrain growth at home.

    Thailand, Vietnam

    It was among 12 firms that expressed interest in buying United Coconut Planters Bank from the Philippine government, people with knowledge of the matter said last June. MUFG owns 77 percent of Thailand’s Bank of Ayudhya and it bought a 20 percent stake in state-owned Vietnamese lender VietinBank in 2013.

    Sumitomo Mitsui Financial Group Inc., Japan’s second-biggest lender by market value, was the first foreign lender to get a license to operate in the Philippines under a 2014 law allowing full entry of overseas banks. Five more lenders have since received approval, President Benigno Aquino said Tuesday at the opening ceremony of Sumitomo Mitsui’s first branch in the Southeast Asian nation.

    Japan’s Mizuho Financial Group Inc. ended talks to buy San Miguel Corp.’s controlling stake in Philippine lender Bank of Commerce, people with knowledge of the matter said in October.

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  • Top Japan bank buys 20% of Security Bank

    Top Japan bank buys 20% of Security Bank

    Bank of Tokyo-Mitsubishi UFJ Ltd., Japan’s biggest bank, is buying a 20 percent stake in the Philippines’ Security Bank Corp. in a deal expected to expand both institutions’ market reach.

    Security Bank Corp. said the deal would infuse an additional P36.9 billion in capital with BTMU investing in newly issued common and preferred shares. The sale remains subject to regulatory approvals and other conditions.

    Described as the largest equity investment in a Philippine financial institution by a foreign investor, the stake sale will increase Security Bank’s shareholder capital from P52.4 billion as of September 2015 to P89.3 billion on a pro-forma post-transaction basis.

    “The additional capital will help us accelerate our strategy over the next three to five years of building our retail banking business as a third business pillar alongside wholesale banking and financial markets,” said Alfonso Salcedo Jr., Security Bank president and chief executive officer.

    Salcedo said the bank would be able to scale up its branch network much faster, from the current 262 to more than 500 branches by 2020.

    “We will be able to conveniently serve our customers with a larger network, offer them a comprehensive range of financial services, as well as make inroads into the Japanese business sector, tapping on BTMU’s expertise,” he added.

    The strategic partnership will result in BTMU, the commercial banking entity of Mitsubishi UFJ Financial Group, becoming the second largest shareholder of Security Bank.

    BTMU will be appointing two directors to Security Bank’s board, while Security Bank will become an equity affiliate of BTMU.

    The Dy Group will remain as the biggest shareholder of Security Bank with majority voting control.

    Through the partnership, BTMU aims to establish a comprehensive financial service platform, including retail banking, to meet clients’ needs in the Philippines. It has adopted similar equity alliance deals in Asia including Vietnam.

    Seeking to take advantage of the fast-growing Philippine market and the economy’s attractive fundamentals, BTMU expects to expand its business platform indirectly through the investment in Security Bank, which is known for its retail and small and medium business capabilities that will be new business areas for BTMU in the country.

    “BTMU has been focusing on Asia as one of its core markets for growth. It is a strategic intent for the bank to identify the right partner in the higher growth markets like the Philippines to deepen our presence, including through inorganic means,” said Go Watanabe, chief executive officer of BTMU for the Asia and Oceania region,
    “This strategic partnership with Security Bank reinforces our Asia strategy and enables both parties to offer more comprehensive financial services to a wider range of customers in the Philippines. We believe in Security Bank’s growth strategy and are keen to play a role and be part of its transformational journey, “he added.

    For Security Bank, the partnership with Japan’s largest banking group is expected to enhance shareholder value by accelerating the bank’s growth strategy, including the
    expansion of its branch network and increasing its retail market penetration.

    It also expects to tap BTMU’s extensive relationship with Japanese corporates, its global network, and diverse range of functions and expertise within MUFG.

    “We are elated to have BTMU as a strategic shareholder and business partner. The transaction will position Security Bank as a large independent bank supporting the growth of the Philippines’ economy, with the strength and capabilities to compete with other larger financial institutions,” said Alberto Villarosa, Security Bank chairman.

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