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Indicative Year-to-Maturity: 4.694%
Security Bank (PH)
- Sector: Financial Services
- Sub Sector: Banks
- Country: Philippines
- Bond: SECBPM 5.5 29
- Indicative Yield-to-Maturity (YTM): 4.694%
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Fundamental View
AS OF 18 Nov 2025Security Bank has historically been a wholesale focused bank. Rapid retail expansion pre-pandemic led to a large asset quality hit when COVID-19 struck. The bank completed revamping its underwriting processes at end-2021 and has resumed brisk growth 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.
Previously high capital ratios have hence fallen; the CET1 ratio is a low 12-13%.
MUFG is a 20% shareholder of Security Bank.
Business Description
AS OF 18 Nov 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 32% consumer, 4% MSME, 29% middle market and 35% corporate at 2Q25. The consumer and MSME book comprises mortgages (44%), auto loans (23%), credit card (23%) and small business loans (10%).
Risk & Catalysts
AS OF 18 Nov 2025Any rating downgrade of the Philippine sovereign would have a negative impact on Security Bank.
RRR cuts and rates coming down, along with brisk growth in higher yielding but riskier retail and MSME (business banking), are supporting the NIM well. Asset quality indicators however have unsurprisingly started to weaken with a jump in credit costs. We remain cautious given the relatively thin reserve cover and capital buffer. Management is now exercising some prudence in retail loan growth after the emergence of stress in credit cards.
Capital ratios have fallen due to brisk RWA growth and now trail peers. We view current levels as low, but do not rule out capital support from MUFG if needed.
A prolonged hit to sentiment from the flood controls scandal would exacerbate the slowdown in GDP and credit growth, and pressure asset quality.
Key Metric
AS OF 18 Nov 2025| PHP mn | FY21 | FY22 | FY23 | FY24 | 9M25 |
|---|---|---|---|---|---|
| Net Interest Margin | 4.43% | 4.23% | 4.49% | 4.73% | 4.70% |
| ROA | 1.0% | 1.4% | 1.1% | 1.1% | 1.1% |
| ROE | 5.6% | 8.4% | 7.0% | 8.1% | 8.2% |
| PPP ROA | 2.30% | 2.17% | 1.97% | 2.18% | 2.40% |
| CET1 Ratio | 19.1% | 16.1% | 15.3% | 12.9% | 12.7% |
| Total Equity/Total Assets | 17.88% | 14.94% | 15.62% | 12.50% | 13.41% |
| Gross NPL Ratio | 3.94% | 2.95% | 3.36% | 2.85% | 3.02% |
| Net LDR | 85.7% | 83.0% | 88.8% | 84.6% | 74.6% |
| Liquidity Coverage Ratio | 150% | 144% | 158% | 178% | 189% |
| Net Stable Funding Ratio | 138% | 122% | 131% | 130% | 143% |
CreditSight View Comment
AS OF 19 Nov 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 improving funding costs from a declining rate environment has supported the NIM. Asset quality however is showing strains from the brisk growth in riskier segments as we had anticipated, leading it to start exercising some prudence in retail loan growth. We remain cautious about the asset quality implications given the relatively thin reserve cover and capital buffer (~12-13% CET1 ratio). We have an Underperform recommendation.
Recommendation Reviewed: November 19, 2025
Recommendation Changed: May 21, 2024
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