Security Bank Plans Strategic Growth and Return to PSE Index by 2029

Security Bank Corp. has announced ambitious plans to enhance its profitability and return to the Philippine Stock Exchange Index (PSEi) by 2029. The bank aims to achieve a double-digit return on equity (RoE) by the end of 2027, a significant improvement from its current RoE of 7.85% as of end-June. This strategic direction was articulated by Security Bank President and Chief Executive Officer Victor Lee Meng Teck during a recent media roundtable.

Lee expressed confidence in the bank's ability to turn around its financial performance, stating that he believes three years is enough time to turn the business around to a double-digit return and that investors are waiting for the bank to turn that corner. He noted that the last time Security Bank achieved a 10% RoE was in 2017, highlighting the significance of this target.

“Personally, I think that for me, three years is enough time for me to turn this business around to a double-digit return. And I think investors are waiting for us to turn that corner, to return a double-digit return.”Victor Lee Meng Teck, President and CEO

To support this growth, Security Bank plans to focus on its small business, project financing, and corporate lending segments. Chief Financial Officer John David “JD” G. Yap indicated that the bank is targeting a RoE of 12% by 2029, alongside improving its return on assets to 1.7% from 1.02%. The bank's strategy includes reducing credit costs to approximately 140 basis points over the next three years.

Despite the prevailing market volatility, which has been exacerbated by geopolitical tensions such as the ongoing conflict in the Middle East, the bank remains optimistic. Lee noted that while credit costs are expected to rise this year, they anticipate a rebound in the following year. He stated that the bank ended last year at 180 bps and is forecasting about 210-220 bps this year, but that will improve moving into next year. He mentioned that the Middle East war has probably created a pickup of about 20-30 basis points on the cost of credit. This cautious approach reflects the bank's commitment to maintaining a conservative outlook amid uncertain macroeconomic conditions.

In terms of growth, Security Bank expects its loans to increase by 3% to 5% this year, with a focus on corporate loans, which are projected to account for 70% of its lending portfolio by 2029. This is a shift from the current mix of 67% corporate to 33% consumer loans. The bank's growth strategy will also leverage its transaction banking business, supported by enhanced digital platforms following the launch of a new retail banking app last year and a corporate banking app anticipated to be approved soon.

“So, we ended last year at 180 bps. We are forecasting about 210-220 bps this year. But that will improve moving into next year.”Victor Lee Meng Teck, President and CEO

Security Bank booked a net income of approximately P3.38 billion, up from P3.04 billion last year. This brought its first-half profit to P6.08 billion, rising from P5.86 billion previously. Despite this positive performance, the bank's shares experienced a slight decline, closing at P64 per share, down 0.31%.

As Security Bank works towards its ambitious goals, it aims to complete client migration from older platforms by the end of 2026 and expand its branch network to 400 locations. The bank's strategic initiatives reflect a broader trend among Philippine financial institutions to adapt and thrive in a challenging economic landscape.