De La Salle University

Ramon V. del Rosario College of Business

Management and Organization Department

SECURITY BANK CORPORATION

Submitted by:
ARNUCO, Andrhea
JOQUICO, Luvi
LABILLES, Marlon
SELUDO, Eljean
VERGARA, Fernando II

Submitted to:
Dr. Regina C. Dy
Security Bank Corporation is one of the Philippines leading universal banks serving retail,
commercial, corporate and institutional clients. Established on June 18, 1951, it was the first private
and Filipino-controlled bank of the post-World War II period.

Security Bank was publicly-listed with the Philippine Stock Exchange (PSE: SECB) in 1995. Over the
years, the Bank prudently managed to remain one of the most stable in the banking industry and is
steadfast in its commitment to serve its clients and stakeholders.

Security Bank is an independent bank with core franchises in Corporate and Investment Banking,
Commercial Middle Market Banking, Retail Banking, and Financial Markets, with a solid niche among
the mass affluent Filipino-Chinese community.

These businesses are managed separately to focus on their respective markets and they operate with
high degree of synergy with each other.

Corporate & investment banking focuses on the top corporate, institutional and public sector
markets
Commercial middle market banking focuses on the middle markets & small-and-medium
enterprises
Retail banking focuses on the individual & retail markets, providing deposit taking and
servicing, mortgage, auto and personal loans and credit card facilities
Financial markets focuses on providing money market, foreign exchange, financial
derivatives, securities distribution, asset management, trust and fiduciary services.
As a full-service universal bank, it has key subsidiaries and affiliates that provide specialized
financial services.

o SB Cards, a credit card company which was a pioneer in the Philippine credit card
industry, having introduced the Diners Club card franchise in the country.

o SB Capital, an investment house providing investment banking services to our

corporate customers.

o SB Equities, a stock brokerage company, one of the top domestic brokerages in the
country.

o Security Land, a joint venture in real estate, which owns prime property in Makati and
land in Cavite.
 o SBM Leasing, a 60:40 joint venture with Japans Marubeni Corporation, which
specializes in heavy equipment leasing

o SB Rental Corporation, which is engaged in the business of renting and leasing.

o In February 2015, SBC launched the Bancassurance product in partnership with

FWD Life, adding to the robustness of financial services offering.

Competition
Security Bank is the 6th largest in total assets in the Philippine banking industry, with total assets of
Php 516Bn ; 8th largest in loans, with loan portfolio of Php 240Bn; and 8th largest in capital, with
capital of Php 53Bn as of December 31, 2015.

Marketing Profile

Product
Deposit products- all access account, easy account, eSecure Savings, Build-Up Savings,
Money Builder, USD Account, 3rd Currency Account.

Consumer Loan Products- Home Loan, Personal Loan, Car Loan and Corporate Employee
Loan

Business Loan Products- Term Loan, Loan Line, Import/Domestic Letter of Credit, etc., Floor
Stock Financing, etc.

Investment Products- Unit Investment Trust Fund (UITF), fixed income securities, investment
management, bancassurance, SB capital market products

Cash Management Products

Price- Very competitive deposit and loan interest rates

Place and Distribution- Security Bank has now a total network of 264 branches and 560 ATMs as of
March 31, 2016. It successfully completed last March 2015 the integration of all 39 branches of thrift
bank subsidiary, Security Bank Savings, into the branch network of parent Security Bank. These
branches now offer the full universal bank product range to wholesale and retail clients.

Promotion and Advertising

In 2014, Security Bank embarked on a rebranding campaign to further strengthen market

appreciation of its retail banking business which complements its wholesale banking
business. At the heart of this goal is to provide priority service and superior customer
experience that resonates with a new brand promise, BetterBanking begins here.

In 2015, Security Bank continued its rebranding campaign focusing on the retail banking
business anchored on providing priority service and superior customer experience in line with
the brand promise of BetterBanking.

In July 2016, the Bank launched its BetterBanking Stories campaign with known personalities
like Vicky Belo (for affluent market, Erwan Heusaff (mass affluent market) and Janine
Gutierez (consumer loan products)

Competitive Advantage

Security Bank is the 6th largest in total assets in the Philippine banking industry, with total
assets of Php 532Bn; 8th largest in loans, with loan portfolio of Php 240Bn; and 8th largest in
capital, with capital of Php 53Bn as of December 31, 2015.

Strong presence in wholesale and middle-market banking as well as treasury businesses.

Over the period 2007 to 2012 and 2014, Security Bank ranked 1st in return on shareholders
equity, 1st in return on assets, 1st in cost to income ratio, 1st in asset quality having the
lowest non-performing loans ratio, and 1st in NPL reserve cover ratio, among private
domestic universal banks.

YouDeserveBetter and Better Banking that promises customer-centricity at the forefront.

Financial Profile
 In 2015, Interest Income from operating activities reached P17.98B, translating to 25.48%%
growth than prior year. This is driven by the Banks continued to execution of its strategy of
building the Retail Banking business to complement its strengths in Wholesale Banking and
Financial Markets.

OPEX grew by 27.6% due to continuing investments in the Retail Bank and in delivering the
BetterBanking promise to customers. Operating profit ended at P5.73B equivalent to 31.9%
OPM.

Net income closed to P7.30B or an increase of 4.45% translating to NIM of 40.6%.

Total assets grew by 34% to P531.81B. Loans increased by 29.4% to P238.62B while
deposits grew by 22.6% to P281.06B. Loan growth was ushered by wholesale loans which
expanded by 20% and consumer loans which increased by 68%.

Notwithstanding the growth of loan portfolio due to new loans, asset quality remained healthy
with net Non-Performing Loans (NPL) ratio at 0.14%, lower than 2014 NPL ratio of 0.28% and
among the lowest in the industry. NPL cover increased to 205% from 200% at end-2014,
among the highest in the industry.

Total equity base strengthened at P52.54B as of end 2015.

2016

The recent 20% infusion of Japanese partner, Bank of Tokyo Mitsubishi UFJ Ltd. (BTMU)
amounting to P36B provides ample room for accelerated growth i.e. expansion of branch
network and ATMs.

Strategy Statement
 Security Bank seeks to be a large independent bank supporting the growth of key sectors of
the economy.
Security Bank shall continue to enhance shareholder value and to maintain the highest
Return On Equity among the top 10 private domestic universal banks in the country.
Security Bank shall continue to build its Retail Bank business as a third business pillar
alongside Wholesale Banking and Financial Markets.
Security Bank shall significantly grow its deposit and loan market shares.
Security Bank shall accelerate its growth and coverage of attractive and profitable niche
markets, focusing on its core revenues.
Source: 2015 Annual Report

Direction: Growing its Retail Banking Business

In 2014, the Bank declared its move to expand its strategy to diversify and grow its retail banking
business. Retail banking focuses on the individual & retail markets, providing deposit taking and
servicing, mortgage, auto and personal loans and credit card facilities

Expansion of SBCs retail banking business is a culmination of a 10 year roadmap that has initially
allowed the Bank to establish a strong presence in wholesale and middle-market banking as well as
treasury businesses.

Growing this business segment is considered by the Bank to be a major growth engine in the coming
years. The plan is to make its retail banking operations a formidable new leg hat would account for
about a third of total business until 2019. This is the Banks strategy to diversify income stream and
unlock higher margins. The Retail Banking targets the emerging mass affluent market, or consumers
with household income of about P50,000 a month of P600,000 a year. This segment comprises about
10 percent of the total population and these are the people who are starting to build their lives and are
building homes and buying cars.

Growing the Retail Bank through BetterBanking

The year 2015 was a year of growth for the retail business. Major growth was seen
particularly in mortgage banking whose loan portfolio jumped by 87%. Total retail loan
portfolio growth was at 68%. Retail deposits also expanded significantly with a year-on-year
growth of 27%.
Driving this expansion was the substantial increase in the number of retail clients which grew
by more than 123 thousand individual customers. Many of these new clients were welcomed
through the launch of new, innovative products during the year.
The new All Access, a checking account that comes with a passbook, checkbook and
Everyday Debit/ATM MasterCard, was offered to existing and new clients in 2015 to provide
them with a deposit account that does almost everything they needed. This generated much
interest and numerous new accounts in the last quarter of the year.
Source: 2015 Annual Report

PROBLEM:
What strategy should the Bank undertake to support its objective in growing in retail market?