Security Bank net profit up 12% to PHP7.5b in 2012

But 4Q12 earnings fell 53% to PHP1.3b.

According to Maybank Kim Eng, Security Bank Corp turned in 2012 net profit of PHP7.5b, 12% higher than the PHP6.7b in 2011. This exceeded market consensus forecast of PHP6.7b but slightly lower than the analyst's estimate of PHP7.8b. 

Here's more from Maybank Kim Eng:

The result also suggests 4Q12 earnings fell 53% YoY to PHP1.3b due to its high base in 4Q11. Recall that SECB booked 85% of its 2011 trading income worth PHP1.7b in 4Q11. With 2012 net profit, annualized return on average equity reached 22%.

Robust loan growth supports net interest income. Loans and receivables grew 30% YoY to PHP119.6b as of end-December 2012, outpacing the 14% growth of the industry. This was funded by a 19% rise in deposits to PHP142.4b. Net interest margin reportedly reached 3.94%, lower by 14bps YoY but still one of the highest in the sector. Consequently, net interest income climbed 8% YoY to PHP8.1b, in line with our estimates.

Higher costs on branch expansion. As expected, non-interest income surged 44% to PHP5.9b on higher trading gains on securities and fee-based income. As a result, gross revenue increased 21% to PHP14.1b. Operating costs, on the other hand, came in higher than expected as it jumped 41% to PHP6.1b due to branch expansion. ]

The bank opened 34 branches last year, bringing total network to 208 branches. This also implies 4Q12 expenses soared 58% to PHP1.6b. Cost-to-income ratio went up to 43.2% in 2012 from 36.9% in 2011.