The income improvement resulted from the strong performance of its interest differential businesses and  more aggressive collection efforts on its portfolio of non-performing assets (NPAs).

Alberto S. Villarosa, president and CEO of Security Bank, said  the first semester income translates to an annualized Return-on-equity (ROE) of 9.7 percent, a significant increase from last year’s 6.4 percent. The bank’s net interest income reflected a quarterly increase of 14 percent as a result of expanded asset volumes and improved margins. It also had higher income from its portfolio of investment securities.

Intensified collection efforts from its non-performing loans (NPLs) resulted in interest income recoveries, further shrinking Security Bank’s NPL ratio to 7.8 percent from the first quarter’s 8.6 percent, which is one of the lowest in the industry.

“Income improvement over the first quarter was achieved, despite the continued buildup of provisions by R232 million for the ROPOA, which was made in case deterioration in market values occurs,” Villarosa said.

Operating expenses were also kept under control, allowing the bank to post a cost-to-income ratio of 54 percent for the second quarter, lower than  the 58 percent recorded in the first quarter of the year.

“Funding costs have been efficiently managed, with focus on building lower-cost deposits. The growth in net margins was supplemented with fee-based income, which had improved by 18 percent over the first quarter level because of higher foreign exchange earnings and recoveries from NPAs,” he said.

Villarosa said the bank’s consumer and corporate banking businesses are tracking their 3-year strategic plan with the launch of new initiatives and products geared towards growth in low-cost deposits.