Security Bank: net profit down 4.1% despite 27.6% net interest income growth

14 мая Security Bank раскрыла результаты за первый квартал 2026 года. Чистый процентный доход вырос на 27,6% год к году, до 15 161,4 млн песо, но чистая прибыль сократилась на 4,1%, до 2 704,2 млн песо, из-за резкого роста отчислений в резервы. При текущей цене акция выглядит привлекательно: мультипликатор P/E 4,2 раза, дивидендная доходность 4,7%, а модель портала оценивает потенциал роста в +22%.

Key takeaways

— Net interest income grew 27.6%, but profit fell due to doubled credit loss provisions

— EBITDA margin compressed from 39.9% to 32.0% amid higher operating expenses

— Net profit as a share of net interest income declined from 23.7% to 17.8%

— Loan growth and securities investments supported interest income

— Shares trade at 4.2x P/E with a 4.7% dividend yield

— Portal model implies 22% upside for the stock

Attractiveness

Key figures, PHP bn

Net interest income grew 27.6%, but profit fell due to doubled credit loss provisions

In Q1 2026, Security Bank's net interest income reached PHP 15,161.4 million, up 27.6% year-on-year. Growth was driven by loans and securities investments: interest income on loans rose from PHP 13,909.9 million to PHP 14,722.5 million, and on investment securities from PHP 4,081.0 million to PHP 4,475.2 million. Interest expenses declined from PHP 6,764.6 million to PHP 4,762.6 million, mainly due to lower funding costs.

However, net profit for the quarter fell 4.1% to PHP 2,704.2 million. The main reason was a sharp increase in credit loss provisions: PHP 3,880.2 million versus PHP 2,377.6 million a year earlier, a more than 1.6-fold rise. Additional pressure came from trading and FX losses: minus PHP 712.5 million and minus PHP 977.5 million, respectively, against gains a year earlier.

EBITDA margin compressed from 39.9% to 32.0% amid higher operating expenses

EBITDA for Q1 2026 grew only 2.5% to PHP 4,856.4 million, while net interest income rose 27.6%. As a result, the EBITDA margin fell from 39.9% to 32.0%. The cause was faster growth in operating expenses: they rose from PHP 11,715.2 million to PHP 13,397.5 million, or 14.4%.

The main drivers were higher credit loss provisions (up PHP 1,502.6 million) and depreciation (up PHP 156.2 million). Staff costs and taxes rose only slightly, while other operating expenses were almost flat. The margin compression reflects deteriorating credit quality and higher provisioning costs, outweighing the positive effect of higher interest income.

Net profit as a share of net interest income declined from 23.7% to 17.8%

In Q1 2026, net profit was 17.8% of net interest income, down from 23.7% a year earlier. This is not a margin or profitability ratio, but an indicator of how much of what is earned from lending and securities remains after all expenses and taxes. The decline reflects higher credit loss provisions and the emergence of trading losses.

The absolute net profit – PHP 2,704.2 million – was 4.1% lower than a year ago. Higher income tax also weighed: PHP 926.2 million versus PHP 875.9 million. As a result, despite strong interest income growth, the bank could not convert it into profit growth due to deteriorating credit quality and market volatility.

Loan growth and securities investments supported interest income

The bank's interest income in Q1 2026 rose 6.9% to PHP 19,924.0 million from PHP 18,645.9 million a year earlier. The main contribution came from loans and receivables: income rose from PHP 13,909.9 million to PHP 14,722.5 million. Income from investment securities (FVOCI and amortized cost) increased from PHP 4,081.0 million to PHP 4,475.2 million.

Interest expenses fell 29.6% – from PHP 6,764.6 million to PHP 4,762.6 million – due to cheaper funding: deposit costs dropped from PHP 1,745.1 million to PHP 1,503.0 million, and borrowing costs from PHP 1,617.1 million to PHP 1,169.5 million. This allowed the bank to grow net interest income despite moderate increases in asset yields.

Shares trade at 4.2x P/E with a 4.7% dividend yield

Over the trailing twelve months (LTM), Security Bank's net profit was PHP 11,510.6 million, and market capitalization – PHP 48,226.5 million. This gives a P/E LTM of 4.19x. This is a low multiple, especially for a bank with growing net interest income. The dividend yield over the same period is 4.67%, notably above the market average.

Return on equity (ROE) for LTM is 7.03% – moderate, reflecting pressure on earnings from provisions. Nevertheless, at such a P/E and dividend yield, the stock looks undervalued if the bank can stabilize credit quality.

Portal model implies 22% upside for the stock

The portal's financial model, based on annualized earnings relative to market cap (ROE vs P/B), implies the stock has 22% upside to its fair value. This is the portal model's own calculation, not a market consensus or target price.

Security Bank shares are held in the 'PH Banks (potential)' strategy on the portal. This is a fact of membership, not an argument for the verdict: inclusion follows each strategy's own screen. Nevertheless, the +22% upside per the portal model is consistent with the low P/E and high dividend yield.

Valuation on the latest reported figures

Bottom line

The strong point of the report was 27.6% net interest income growth, driven by cheaper funding and loan expansion. However, almost all of that growth was offset by doubled credit loss provisions and trading losses, causing net profit to fall 4.1%. The stock trades at 4.2x P/E with a 4.7% dividend yield, which looks attractive if the bank can stabilize portfolio quality. The portal model implies 22% upside. The key question for holders is the trajectory of provisions: if they continue to rise, earnings and dividends will remain under pressure, but at the current valuation, some risk is already priced in.