DOWNLOAD
Country: Philippines
Security Bank (PH)
- Sector: Financial Services
- Sub Sector: Banks
- Country: Philippines
- Bond: SECBPM 5.5 29
- Indicative Yield-to-Maturity (YTM): 4.694%
Detailed Information
Read this content. Log in or sign up.
If you are an investor with us, log in first to your Metrobank Wealth Manager account.
If you are not yet a client, we can help you by clicking the SIGN UP button.
Fundamental View
AS OF 07 Mar 2025- Security Bank has historically been a wholesale focused bank. Rapid retail book expansion pre-pandemic led to a large asset quality hit when COVID-19 struck. The bank completed working through its risk issues at end-2021 and resumed brisk growth again in the retail book since.
- The bank had a less well-established deposit franchise than most peers, resulting in a heavy hit to NIMs when rates rose this cycle. This has led it to focus aggressively on growing the higher yielding retail and MSME segments, the latter via forming a new business banking segment in 2022.
- Capital ratios have fallen as the bank refocused on growth; the CET1 ratio is in a low 12-13% range.
- MUFG is a 20% shareholder of Security Bank.
Business Description
AS OF 07 Mar 2025- Security Bank was established in 1951 and obtained its universal banking license from the BSP in 1994. It is today the 9th largest bank in the Philippines.
- The bank is majority-owned by longtime owner Frederick Y. Dy (23.7%) and MUFG Bank (20%), which acquired its stake in April 2016.
- SB Finance, a joint venture between Security Bank and Thailand's Bank of Ayudhya (Krungsri), a consolidated subsidiary of MUFG, was launched in 2019. The unit is a consumer finance company formed to engage in the unsecured loans business in the Philippines, focusing on the lower mass retail segment.
- Security Bank's loan portfolio is 29% consumer, 3% MSME, ~28% middle market and ~40% corporate at 4Q24. The consumer and MSME book comprises mortgages (48%), auto loans (20%), credit card (23%) and small business loans (9%) as of 3Q24.
Risk & Catalysts
AS OF 07 Mar 2025- Any rating downgrade of the Philippine sovereign would have a negative impact on Security Bank.
- Margin pressure from the bank’s earlier weaker deposit franchise is easing with the declining rate environment and heavy growth focus on the higher yielding retail and MSME (business banking) segments, which continues to be the strategy going forward.
- While asset quality held up in FY24, we are cautious about risks from the brisk growth in riskier segments, given the thinning reserve cover and capital buffer.
- Capital ratios have fallen due to brisk RWA growth and are now behind peers. They are set to fall by a further ~1 ppt from the buying of a 25% stake in Home Credit Finance Philippines (HCPH) from MUFG, which would take the CET1 ratio to ~12%. We regard this level as low, but do not rule out capital support from MUFG if needed.
Key Metric
AS OF 07 Mar 2025| PHP mn | FY20 | FY21 | FY22 | FY23 | FY24 |
|---|---|---|---|---|---|
| Net Interest Margin | 4.71% | 4.43% | 4.23% | 4.49% | 4.73% |
| ROA | 1.0% | 1.0% | 1.4% | 1.1% | 1.1% |
| ROE | 6.2% | 5.6% | 8.4% | 7.0% | 8.1% |
| PPP ROA | 4.24% | 2.30% | 2.17% | 1.97% | 2.18% |
| CET1 Ratio | 19.2% | 19.1% | 16.1% | 15.3% | 12.9% |
| Total Equity/Total Assets | 18.89% | 17.88% | 14.94% | 15.62% | 12.50% |
| Gross NPL Ratio | 3.90% | 3.94% | 2.95% | 3.36% | 2.85% |
| Net LDR | 99.6% | 85.7% | 83.0% | 88.8% | 84.6% |
| Liquidity Coverage Ratio | 166% | 150% | 144% | 158% | 178% |
| Net Stable Funding Ratio | 132% | 138% | 122% | 131% | 130% |
Scroll to view columns
CreditSight View Comment
AS OF 13 Mar 2025Security Bank has historically been a wholesale focused bank. Rapid retail expansion leading up to the pandemic led to a large asset quality fallout. It has since resumed aggressive growth in higher yielding but riskier retail and MSME segments to counter NIM pressure. This along with a now declining rate environment will continue to support the NIM. Asset quality held up in FY24 but we are concerned about risks from the pace and direction of loan growth. The previously strong capital position has now fallen behind peers due to brisk RWA growth, and will fall further to a low ~12% level following the acquisition of a 25% stake in Home Credit Finance Philippines from MUFG. The NPL cover has declined to below 80%. We have an Underperform recommendation.
Recommendation Reviewed: March 13, 2025
Recommendation Changed: May 21, 2024
Recommended Issuers
Who We Recommend
International Container Terminal Services Inc
Bond:
ICTPM 3.5 31
BDO Unibank
Woori Financial Group
Bond:
WOORIB 4.875 28
How may we help you?
Search topics about wealth insights and investments.Security Bank
- Sector: Financial Services
- Sub Sector: Banks
- Country: Philippines
- Bond: SECBPM 5.5 29
- Indicative Yield-to-Maturity (YTM): 4.704%
- Credit Rating : BBB
Detailed Information
Read this content. Log in or sign up.
If you are an investor with us, log in first to your Metrobank Wealth Manager account.
If you are not yet a client, we can help you by clicking the SIGN UP button.
Fundamental View
AS OF 27 Feb 2025- Security Bank is the 7th largest bank in the Philippines by total assets and was established on June 18, 1951. Its dollar bonds provide better yield pickup compared to its nearest comparable. We remain comfortable with the bond given Security Bank’s total capital ratio of 14.20%, which is 400 basis points above the minimum regulatory hurdle, which can buffer modest credit losses in its loan portfolios should macroeconomic headwinds worsen.
Business Description
AS OF 27 Feb 2025- Security Bank is the 7th largest bank in the Philippines by total assets and was established on June 18, 1951. Security Bank’s businesses include wholesale banking, financial markets, and retail banking. The bank provides commercial banking services such as deposit products, loans and trade finance, domestic and foreign fund transfers, treasury, foreign exchange, and trust services.
- Security Bank's loan portfolio is 32% consumer & MSME, 28% middle market, and 40% corporate as of 3Q 2024.
Risk & Catalysts
AS OF 27 Feb 2025- Any rating downgrade of the Philippine sovereign would have a negative impact on Security Bank.
- Given the current rate cut environment that drives funding costs lower, Its strategy to aggressively capture market share in the retail and MSME segment might allow the bank to deliver faster growth and higher net interest income margin.
- Rapid expansion on higher yielding retail and MSME segments could worsen asset quality and increase credit costs.
Recommended Issuers
Who We Recommend
International Container Terminal Services Inc
Bond:
ICTPM 3.5 31
BDO Unibank
Woori Financial Group
Bond:
WOORIB 4.875 28