Security Bank Targets 12% ROE by 2029, Shifts Focus to Profitability

MANILA, Philippines — Security Bank Corp. is targeting a return on equity of 12 percent by 2029 as it shifts its focus from balance sheet expansion to improving profitability, efficiency and the quality of its growth. Return on equity (ROE), a measure of how much profit a bank generates from shareholders’ capital, is currently at around eight percent as of end-June. Security Bank chief financial officer John David Yap said the bank expects the ratio to reach double digits by end-2027 before climbing to 12 percent by 2029. The target forms part of Security Bank’s three-year strategy centered on wealth management, entrepreneurial banking and corporate and institutional banking, areas where the lender already has enough scale to deepen client relationships and generate stronger returns. “We are not growing assets for the sake of growing assets,” Security Bank president and CEO Victor Lee said, adding that the bank is focused more on returns and wants to bring ROE back to double-digit levels. Security Bank reported a net income of P6.08 billion in the first half, up by 3.9 percent from P5.86 billion a year earlier. Its ROE stood at 7.85 percent, while return on assets was at 1.02 percent. Net interest margin widened to 5.78 percent from 4.56 percent. Under the 2029 targets, the bank wants return on assets to rise to 1.7 percent and its cost-to-income ratio to fall to about 51 percent from the current 58.5 percent. Credit cost is expected to improve to around 140 basis points from 180 basis points, while the common equity Tier 1 (CET1) ratio will be kept at around 12.5 to 13 percent. The bank plans to improve returns by getting more business from existing client relationships instead of relying mainly on loan growth. This includes capturing more operating deposits, transaction banking activity, fees and investment business from the same customers. In wealth management, Security Bank said its assets under management have grown nearly 14-fold over the past nine years. It also plans to deepen its presence among entrepreneurs by combining loans with payments, payroll, cash management and other business services. For large companies, the lender is targeting more project finance, trade finance, transaction banking and capital markets business. Its project finance portfolio reached P76 billion in 2025 from P33 billion previously, while it has arranged 10 project finance loans representing more than P500 billion worth of projects since 2025. Lee said Security Bank does not expect the strategy to require fresh capital as it has largely relied on retained earnings to fund expansion. It also sees its current capital position as sufficient to support the three-year plan. “We do not see the need at the current capital levels,” Lee said, adding that the bank expects its capital ratio to remain comfortably within its 12 to 13 percent range. The bank said the projections do not assume any capital injection or equity raising. For 2026, meanwhile, Security Bank expects loan growth to pick up in the second half after remaining nearly flat in the first six months. Lee said the bank is seeing a stronger pipeline and expects full-year loan growth of around three to five percent. “Second half, we are seeing pipelines. So we should end the full year with mid-single-digit growth for the year,” Lee said. The bank’s net loans stood at P675 billion as of end-June. Retail loans accounted for roughly 33 percent of the portfolio, micro, small and medium enterprise loans for about four percent, with the balance largely in corporate lending. The lender expects any near-term growth to come more from the corporate side while retail balances could ease slightly. According to Lee, the bank does not expect a sharp deterioration in the loan portfolio, although higher geopolitical and economic risks have pushed up credit costs. For the full year, Yap said the bank is targeting a cost-to-income ratio of 55 to 58 percent, a CET1 ratio of around 12.5 percent and loan growth of as much as five percent. Despite the more difficult economic environment, management said the bank remains optimistic heading into 2027, while keeping a more conservative stance on new lending and closely monitoring borrowers most exposed to inflation and weaker domestic demand.