26 February 2021, Singapore – Security Bank topped the ranking of Strongest Banks by Balance Sheet in the Philippines in 2020. Security Bank and other banks were recognised at The Asian Banker’s Strongest Banks by Balance Sheet Briefing and Recognition Virtual Ceremony 2020.
This is the most comprehensive annual evaluation that captures the quality and sustainability of the balance sheets of banks in the Asia Pacific (APAC), Middle East, and Africa regions.
The ranking is based on a detailed and transparent scorecard that evaluates commercial banks and financial holding companies (banks) in six areas of balance sheet financial performance, namely the ability to scale, balance sheet growth, risk profile, profitability, asset quality, and liquidity. For Strongest Banks by Balance Sheet 2020, the financial information in the first half of 2020 (1H 2020) was collated and incorporated into the assessment of how banks performed during the COVID-19 pandemic
Security Bank tops ranking of strongest banks by balance sheet in the Philippines
The bank outperformed its peers in the Philippines in profitability with the strongest profit growth, the lowest cost to income ratio and the best non-interest income to total operating income ratio. It saw an increase in capital adequacy ratio (CAR) from 19.2% in the first half of 2019 (1H 2019) to 19.7% in the same period in 2020, which is higher than the industry average ratio of 16.1%. Its liquidity position was also strengthened. Meanwhile, its asset quality remained relatively sound.
The bank is in 39th place out of 500 in the Strongest Bank by Balance Sheet ranking in APAC. Metrobank and Asia United Bank, the second and third strongest bank in the Philippines, placed 45th and 52nd, respectively. Compared to Metrobank, Security Bank showed better performance in indicators such as return on assets (ROA), the cost to income ratio and non-interest income to total operating income ratio. Banco de Oro (BDO), the largest bank by total assets in the country, recorded a higher score in scale but its CAR and liquid assets to total deposits and borrowings ratio were much lower at 13.8% and 24.7%, respectively. BDO also registered weaker profitability with the ROA of 0.3% and the cost to income ratio of 60%.
Sanjiv Vohra, president and chief executive officer at Security Bank, in his acceptance speech said, “More than the strength of a balance sheet, the quality of our assets and the ability to scale, this award affirms our concerted efforts to remain adaptive to a changing environment. This recognition further validates our efforts to prioritise people while protecting the bank against the backdrop of a global health crisis. We are grateful to confront this pandemic from a position of strength, enabling us to help the economy to recover and motivating us to keep getting better”.
The following were especially considered in the evaluation of the banks’ balance sheet strength and resilience: how accelerated digitalisation are enhancing bank balance sheet strength, the impact of debt moratoria, rescheduling and financial aid measures introduced by regulators on bank asset quality, how banks are growing alternative sources of income amid the record low interest rate, and the strategic economic relief and regulatory support in response to the crisis and effect on the pace and scale of recovery.
The bank demonstrated stronger profitability than its peers
Compared to other banks in the Philippines, Security Bank achieved a higher strength score in profitability at 4.5 out of 5. The pandemic had a strong impact on the profitability of the banking sector, with the average ROA of 10 Philippine banks on the list decreasing from 1.22% in 1H 2019 to 0.8% in 1H 2020. However, the bank registered higher ROA at 1.46% in 1H 2020, compared to 1.29% in 1H 2019.
The bank’s operating income and operating profit surged by 68% and 119% year-on-year (YoY), respectively in 1H 2020 due to strong growth in net interest income and securities trading gains. Despite the significant rise in provisions for credit losses, its net profit went up by 14% YoY. Its cost to income ratio improved to 39.7%, the lowest among its peers in the country. It also recorded the highest non-interest income to total operating income ratio at 38.8%.
The bank invests in digital upgrades and contact centres to assist customers
Vohra said they maintain their posture of protecting the people from a health perspective and support their clients as things start inching back to normalcy.
“From our perspective, we continue to invest in the customer. Despite the crisis, we had identified four essential areas. We continue to invest in accelerating the pace of our digital platform upgrade both in retail and wholesale. We are also improving our ability to contact customers through our contact centre capability. We are enabling both voice and non-voice capabilities for service, and also to boost sales through the contact centre. Lastly, we are improving our connection, both infrastructure and systems, largely because in today's pandemic and the crisis we are in, people are finding it difficult to meet their obligations and we would like to approach them in a vastly different way through our connection systems,” Vohra said.
About the programme
The Asian Banker Strongest Banks by Balance Sheet is an annual assessment of the financial and business performance of the banking industry in the Asia Pacific, Middle East, and Africa regions. The assessment ranks the top performing banks in each country by strength, an evaluation that is based on a belief that a strong bank demonstrates long-term profitability from its core businesses.
The scope and coverage for The Asian Banker Strongest Banks by Balance Sheet come from both the mature markets and the most promising emerging markets in the regions. The focus of the assessment is on commercial banks and financial holding companies with a significant proportion of activity in commercial banking. The assessment does not include central banks, policy banks or finance companies.
The winners are determined using a scorecard approach based on six crucial performance indicators rated on a scale of 0-5: scale, balance sheet growth, risk profile, profitability, asset quality, and liquidity.
About The Asian Banker
The Asian Banker is the region’s most authoritative provider of strategic business intelligence to the financial services community. The Singapore-based company has offices in Singapore, Malaysia, Manila, Hong Kong, Beijing, and Dubai, as well as representatives in London, New York, and San Francisco. It has a business model that revolves around three core business lines: publications, research services and forums. The company’s website is www.theasianbanker.com
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Ms. Sue Kim