Fitch affirms Security Bank's 'D' rating

Credit watcher Fitch Ratings has affirmed the individual rating of Security Bank Corp. at "D." A rating of "D" means that a bank has weaknesses of internal or external origin, Fitch said in a report Friday. A "D" rating also hints at concerns about the bank's profitability, balance sheet integrity, franchise, management, operating environment or prospects, the report added. "Security Bank's NPL [non-performing loans] were surprisingly resilient during the 2009 downturn, and that the loan concentration concerns have been largely alleviated by the bank's strong loss absorption capacity in view of its high capital base and high loan reserves," Fitch said. Fitch said Security Bank's rating reflects its relatively small local franchise even though its capital position and profitability are growing robustly. Security Bank's core tier-1 capital adequacy ratio at the end of the first half of this year stood at 15.5 percent. "These factors, together with the bank's high reserves buffer, mitigate the risks of its concentrated loan book," Fitch said in the report, noting that the loan book reflects its lending focus to large corporations and middle market accounts. Fitch said Security Bank may be "susceptible to a rapid increase in delinquencies under tough credit conditions." However, such risks have largely receded in an improved economic environment, Fitch added. The bank's NPL reserve coverage at end-June this year was slightly over 200 percent due to "pre-emptive provisioning efforts," it added. —JE/VVP, GMANews.TV