A painful 2025 might be setting the table for a big 2026 comeback — but only if you know what to look for.

Here’s the Honest Truth About Security Bank Right Now

Let’s be real for a second.

If you’ve been watching Security Bank Corporation (PSE: SECB) lately, you’ve probably noticed one thing: the stock has been quietly drifting lower. It’s sitting at around Php 65.80 as of this writing, and many investors are wondering — is this a warning sign, or a hidden opportunity?

The short answer? It depends on how long your time horizon is — and how well you understand what’s actually happening inside this bank.

Here’s the thing. When a bank’s profits disappoint, everyone panics. But sometimes, a tough quarter is not the end of the story. Sometimes, it’s the beginning of a turnaround. And that’s exactly the situation I want to walk you through today.

Whether you’re a complete beginner or someone who’s been investing for a few years, stick with me. By the end of this article, you’ll understand exactly what’s going on with SECB, whether the current price makes sense, and whether it deserves a spot in your portfolio.

What Is Security Bank? (Simple Overview)

Security Bank Corporation — or SECB on the Philippine Stock Exchange — is one of the country’s established universal banks. It started as a commercial bank back in 1951 and has grown over the decades into a full-service financial institution offering everything from regular savings accounts to corporate loans and wealth management products.

Today, the bank operates hundreds of branches nationwide and manages over a trillion pesos in total assets. In terms of size among Philippine banks, it sits around the 10th spot — not the biggest, but certainly not a small player either.The bank’s business can be broken down into two main areas: wholesale banking (serving large corporations and businesses) and retail and small business lending (serving everyday consumers and SMEs). In recent years, the bank has been strategically growing its retail and SME segment, which typically generates higher returns — but also carries higher risk.

What Happened in 2025? Here Are the Key Highlights

Let’s break down what the bank reported for its full-year 2025 performance — in plain language.

1. Revenue Was Actually Growing… But Costs Grew Faster

Here’s what’s interesting: Security Bank’s revenues actually grew quite well in 2025. Total interest income — basically the money the bank earns from its loans — climbed by over 15% compared to the previous year. And income from trading activities and fees also jumped significantly.

So on the revenue side? Things were looking good.

The problem came from two places: first, operating costs rose by roughly 15% as well, erasing a big chunk of the income gains. Second — and this is the bigger issue — the bank had to set aside dramatically more money in ‘provisions.’

2. What Are Provisions, and Why Do They Matter?

Think of provisions like a safety net. When a bank gives out loans and some customers can’t pay them back, the bank needs to prepare for that possibility in advance. The money they set aside for this is called a provision.

In 2025, Security Bank nearly doubled its provisions — setting aside almost Php 12.8 billion, compared to Php 6.6 billion the previous year. That’s a massive jump.

The main reason? Older credit card loans that are now becoming difficult to collect. This is called a loan ‘seasoning’ problem — basically, loans that were issued a few years ago are now turning sour, and the bank is cleaning up the mess.

Because of these higher provisions, full-year profit grew only modestly — around 3.5% — ending at about Php 11.6 billion. That’s below what analysts were expecting.

3. A New Captain Has Taken the Wheel

One of the most important developments at Security Bank right now is a leadership change. A new President and CEO assumed the role at the start of 2026, and he’s signaling a major strategic reset.

The priorities? Strengthen the bank’s capital position. Clean up the loan book. Cut costs. And gradually shift toward more profitable, sustainable business lines like SME banking and wealth management.

The message is clear: 2026 is a year of rebuilding, not expanding. Loan growth is expected to be slow, credit costs will likely remain elevated in the near term, but the goal is to come out of this phase as a stronger, leaner bank.

4. Asset Quality Is Starting to Stabilize

Here’s a glimmer of good news. The bank’s problem loan ratio — which measures how many of its loans are not being repaid — actually improved slightly toward the end of 2025. It came down from about 3.0% to around 2.9%.

That’s not a dramatic improvement, but it suggests the worst might be passing. The bank also increased its coverage ratio — meaning it now has more reserves relative to its problem loans — which is a sign of responsible financial management.

My Analysis: What Does This All Really Mean for Investors?

Okay, so now you know the facts. But what does it actually mean?

Let me give you my honest take.

Security Bank is going through what I’d call a ‘painful but necessary reset.’ The elevated provisions are not a sign that the bank is going bankrupt. They’re actually a sign that management is being responsible — they’re acknowledging problems in the loan book and setting aside money to deal with them properly.

The bigger risk would be if management tried to hide these problems and pretended everything was fine. Instead, they’re being transparent, changing leadership, and laying out a clear plan.

The challenge is timing. This kind of turnaround takes time — likely one to two years before the benefits really show up in earnings. Provisions will remain high through most of 2026. Profit growth will be modest in the near term.

But here’s the catch: the stock price has already fallen significantly. At Php 65.80, the market seems to be pricing in a lot of the bad news already. The question is whether the long-term story is still intact — and based on the fundamentals, I believe it is.

The bank’s revenue engine is working. Net interest margins are improving. Fee income is growing. Trading income beat expectations. When the provisions eventually normalize, earnings should jump significantly.

But is the current price the right entry point? Let’s do the math.

My Independent Valuation of SECB

For banking stocks, I use what’s called a ROE-Driven Earnings Model. This method focuses on how much profit the bank earns relative to its equity (the shareholders’ money in the business), and uses that to arrive at a fair price.

Let me walk you through it step by step — no complicated formulas needed.

Step 1: Normalize Earnings

The 2025 earnings were suppressed because of the exceptionally high provisions. This is a temporary situation, not a permanent one. To get a better picture of the bank’s true earning power, I look at what earnings should look like once things normalize.

Based on the bank’s recent revenue trajectory, its improving margins, and the expected gradual reduction in credit costs as the portfolio is cleaned up, I estimate FY2026 earnings per share at around Php 18.50. This reflects a recovery scenario where provisions remain elevated but start to moderate, and where the bank’s revenue growth continues at a steady pace.

Step 2: Determine the Right Valuation Multiple

For a bank in transition mode — with ROE currently around 7.9% but projected to improve toward 9.7% to 10%+ over the next two years — I apply the ROE-Driven Earnings Model.

Base P/E for Banks: 6x to 8x

• ROE currently below 12%: No positive adjustment (0x)
• However, ROE is on an upward trajectory toward 10%+: +0.5x forward-looking adjustment
• Earnings growth projected at 20%+ in FY26: +1x
• Elevated credit costs / NPL concerns still present: -1x
• New CEO, strategic reset underway: Neutral to slight negative in near term (-0.5x)

Adjusted P/E = Base 7x + 0.5x + 1x – 1x – 0.5x = 7x

This is a conservative but fair multiple that accounts for both the bank’s recovery potential and its near-term challenges.

Step 3: Calculate Fair Value

Valuation Component	Value
Normalized FY26E EPS	Php 18.50
Base P/E (Banking Sector)	6x – 8x
ROE Trajectory Adjustment	+0.5x
Earnings Growth Adjustment	+1.0x
Credit Cost / Risk Adjustment	-1.0x
Leadership Transition Adjustment	-0.5x
Final Adjusted P/E	7x
Fair Value = EPS × P/E	Php 18.50 × 7 = Php 129.50
Conservative Fair Value Estimate	Php 95.00 – Php 105.00
Margin of Safety Applied	20% – 25%
Buy Below Price	Php 76.00 – Php 84.00
Current Price (Reference)	Php 65.80
Gap to Buy Below Price	~Php 10 – Php 18 below target

Note: My conservative range of Php 95.00 – Php 105.00 reflects a mid-scenario where earnings recover toward normalized levels. I’m using a haircut from the pure EPS × P/E output of ~Php 129 to reflect the uncertainty of the transition period and the possibility that earnings recovery may be slower than expected. The buy below price of Php 76.00 applies a 25% margin of safety to Php 101.00 (midpoint of my fair value range), which is the appropriate buffer for a bank going through a reset phase.

The Risks — And Why You Should Take Them Seriously

I want to be balanced here. Investing is never a one-sided story. Here are the real risks you should consider before putting money into SECB:

Risk 1: Provisions May Stay High Longer Than Expected

Management already admitted they called the ‘peak’ of credit costs too early before. There’s a chance that problem loans — especially from the credit card portfolio — continue to surface in 2026. If provisions remain elevated through 2027, the earnings recovery timeline gets pushed back further.

Risk 2: Slow Loan Growth Caps Revenue Upside

The new strategy deliberately slows down loan growth to prioritize quality. While this is the right move for the bank’s long-term health, it means revenue growth may also slow. Banks make money by lending — so less lending means less income in the near term.

Risk 3: Competition is Intensifying

The Philippine banking sector is becoming increasingly competitive, with digital banks and larger players like BDO and BPI constantly expanding. Security Bank is a mid-sized player, and maintaining its market position requires continued investment in technology and service quality.

Risk 4: Strategic Execution Risk

The bank has a brand-new CEO and a strategy that’s still being finalized. Execution risk is real. If the new leadership fails to deliver on its targets — particularly the cost-to-income ratio improvement and capital strengthening — the timeline for ROE recovery could be longer.

Risk 5: Macro Environment

Philippine economic growth, interest rates, inflation, and foreign exchange movements all affect bank profitability. Any significant economic slowdown — whether domestic or driven by global factors — could lead to further loan impairments.

My Conclusion: Beaten Down, But Not Broken

Here’s the bottom line on Security Bank.

2025 was genuinely disappointing. Profits came in below expectations, provisions nearly doubled, and the stock has been drifting lower. On the surface, it looks like a story of decline.

But dig deeper, and you’ll find something different. The bank’s revenue engine is actually running well. Interest margins are improving. Fee income is growing. Leadership is taking the right steps to clean up the balance sheet and position the bank for stronger long-term returns.

The current price of Php 65.80 is actually below my buy-below target of Php 76. That means patient investors who are willing to wait 2 to 3 years for the turnaround to play out could potentially be looking at a meaningful upside from current levels — alongside a 4.3% dividend yield while they wait.

Is this a ‘sure thing’? No investment ever is. The risks are real, and the recovery will take time. But for long-term investors with the discipline to hold through short-term pain, SECB at current prices deserves serious attention.

The rule in long-term investing: Buy quality companies when they’re going through temporary difficulty. Avoid buying them only when everything looks perfect — that’s usually when the price is already too high.