SM Investments Net Income Rises 30% To PHP55.9 Billion In YTD Sept On Solid Consumer Confidence

SM Investments Corporation (SM Investments) reported a consolidated net income of PHP 55.9 billion in the January to September period, a 30% increase from PHP 42.9 billion in the same period last year.

SMIC's consolidated revenues rose by 15% to PHP 440.4 billion from PHP 382.0 billion in the same period last year. I Photo: SM Supermalls

Consolidated revenues rose by 15% to PHP 440.4 billion from PHP 382.0 billion in the same period last year.

“Our ongoing healthy growth reflects buoyant consumer activity in malls and sustained spending in discretionary retail categories,” SM Investments President and Chief Executive Officer Frederic C. DyBuncio said. “We look forward to the fourth quarter, while continuing to monitor the impact of food prices and interest rates on consumer wallets.”

Of the total net earnings, retail accounted for 18%. Banking accounted for the largest share at 47%, while property contributed 26%, and portfolio investments pitched in 9%.

Retail

SM Retail reported a net income of PHP 13.7 billion, up 19% from PHP 11.5 billion in the previous period. Retail revenues grew by 12% to PHP 290.6 billion from PHP 258.4 billion in the previous period.

Same-store sales for the department store and specialty retail businesses grew by 18% and 9%, respectively, reflecting strong consumer spending in key categories, while store expansion also buoyed growth.

Food retail performance remained positive, supported by volume growth and expansion.

Banking

BDO Unibank, Inc. (BDO) reported a net income of PHP 53.9 billion compared to PHP 40.0 billion in the same period last year, backed by broad-based growth across its core businesses.

Net interest income increased to PHP 137.4 billion, with customer loans growing by 7.5% year-on-year to PHP 2.7 trillion, and deposits expanding by 12% to PHP 3.4 trillion.

The non-performing loan (NPL) ratio remained stable at 1.99% despite the higher interest rate environment, while NPL coverage improved to 176%.

The bank continues to set aside provisions in line with its conservative credit and provisioning policies.

China Banking Corporation posted a consolidated net income of PHP 16.2 billion in the first nine months, a 10% increase compared to the same period last year, thanks to robust growth from core businesses and lower loan loss provisions.

Net interest income grew by 16% to PHP 39.2 billion as the 44% surge in top-line revenues cushioned the nearly triple increase in interest expense.

Gross loans grew by 10% year-on-year to PHP 765 billion, driven by the 19% expansion in consumer loans, particularly teachers’ loans and credit cards. Total deposits increased by 14% to PHP 1.1 trillion, resulting in a 49% CASA (current account savings account) ratio as term deposits grew year-on-year.

The bank’s level of bad loans continued to be manageable, posting a better-than-industry average NPL ratio of 2.2%.

Property

SM Prime reported PHP 30.1 billion in net income in the first nine months of 2023, a 37% increase compared to PHP 22.0 billion in the same period last year. Consolidated revenues grew by 26% to PHP 92.6 billion from last year’s PHP 73.7 billion.

SM Prime’s mall business, which accounts for 57% of consolidated revenues, posted PHP 52.5 billion in the nine-month period, up by 37% from PHP 38.2 billion in the same period last year. Mall rental income rose to PHP 44.8 billion, 29% higher than last year’s PHP 34.7 billion.

SM Prime’s cinemas, event ticket sales, and other revenues increased significantly to PHP 7.7 billion from PHP 3.5 billion in the same period last year.

SM Prime’s primary residential business, led by SM Development Corp., reported PHP 28.7 billion, a 10% increase compared to PHP 26.1 billion in the same period last year. SMDC’s reservation sales reached PHP 89.3 billion, a 6% increase compared to PHP 83.9 billion in the same period last year.

SM Prime’s other key businesses, which include offices, hotels, and convention centers, generated PHP 9.5 billion in revenues, up 33% from PHP 7.2 billion in the same period last year.

Portfolio Investments

Portfolio investments continued to sustain growth, contributing 9% to the Group’s consolidated net income. Philippine Geothermal Production Company and NEO, SM Investments’ office portfolio, contributed significantly to net income.

Balance Sheet

Total assets of SM Investments increased by 4% to PHP 1.5 trillion. The gearing ratio remained conservative, with 35% net debt to 65% equity.

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