SECURITY Bank Corp. is aiming to regain a spot on the benchmark Philippine Stock Exchange index (PSEi), with management banking on stronger financial results and improved investor confidence to lift its market valuation.
The bank on Thursday said returning to the benchmark index would depend largely on rebuilding its financial performance, particularly its return on equity (ROE), and improving its share price.
“We need to first improve our financials; so our financials need to be strong so that our [share] price can hopefully grow,” Security Bank President and CEO Victor Lee told reporters.
The bank is targeting a return to double-digit ROE by the end of 2027 as part of its three-year transformation plan, with a longer-term goal of reaching 12-percent ROE by 2029.
Security Bank currently has a price-to-book ratio of about 0.3 times, which management said was among the lowest compared with its banking peers.
“So for us, it’s imperative for us to deliver those double-digit returns moving into next year. And if we are able to do that, I think investor confidence will come back,” Lee said.
He said even a doubling of the bank’s price-to-book ratio from 0.3 to 0.6 times could potentially result in a doubling of its share price, improving its chances of meeting the market capitalization requirement for PSEi inclusion.
The PSEi consists of 30 of the country’s highly traded and most capitalized listed firms, and inclusion in the index is regularly reviewed by the bourse based on liquidity, market capitalization, and free float level.
“If our price to book just doubles from 0.3 to 0.6, then we are seeing our share price double. And that will give us a good chance to get back in,” he said.
Lee said the bank’s approach would focus on delivering “consistent, boring returns” to rebuild confidence among investors.
“Banking needs to be boring. We just need to deliver consistent, boring returns. And you get your price to book [ratio],” he said.
Security Bank was previously part of the PSEi from September 2016 to August 2022. Management did not give a specific timetable for its expected return to the index during the briefing.
For now, the bank is prioritizing profitability over balance sheet expansion. Management said it was not pursuing asset growth simply to improve its ranking among banks, but was instead focused on generating better returns for shareholders.
“We are not growing assets for the sake of growing assets,” Lee said. “We are actually focused more on returns in ROE.”
Under its three-year plan, the bank aims to raise ROE from around eight percent to 12 percent by 2029 and return on assets from one percent to 1.7 percent.
It also plans to bring its cost-to-income ratio down from 58.5 percent to 51 percent and improve credit costs from 180 basis points to around 140 basis points, while keeping its common equity tier 1 ratio at about 12.5 percent to 13 percent.
In the near term, Security Bank expects loan growth to pick up in the second half of the year after remaining broadly flat during the first half.
The bank expects full-year loan growth of around 3 to 5 percent, while its nonperforming loan ratio has remained steady at about three percent.
Management said it remained optimistic about the Philippine economy despite inflationary pressures, geopolitical tensions and a weak peso.
“We are still optimistic going into 2027,” Lee said.
The bank said its three-year plan was based on a conservative, “all-weather” economic scenario, leaving room for upside should economic conditions improve.
Security Bank also plans to focus growth on areas where it sees stronger demand and returns, including project finance and renewable energy, while leveraging its subsidiaries and digital banking capabilities.
Management said the bank had funded more than P500 billion in project finance over the past couple of years, including renewable energy projects, which it sees as an area with significant growth opportunities.
The bank’s shares slipped P0.20, or 0.31 percent, to close at P64.00 each on Thursday amid a 0.28-percent downturn for the benchmark PSEi.
