SM Investments Net Income Rises 30% To P55.9 Billion In YTD September On Solid Consumer Confidence

SM Investments Corporation (SM Investments) reported a consolidated net income of P55.9 billion in the January to September period, higher by 30 percent from P42.9 billion in the same period last year.

Consolidated revenues rose 15 percent to P440.4 billion from P382.0 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 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 total net earnings, retail accounted for 18 percent. Banking accounted for the largest share at 47 percent while property contributed 26 percent and portfolio investments pitched in nine percent.

Retail

SM Retail reported net income was at P13.7 billion, up 19 percent from P11.5 billion in the previous period.

Retail revenues grew 12 percent to P290.6 billion from P258.4 billion in the previous period.

Same store sales for the department store and specialty retail businesses grew 18 percent and nine respectively, reflective of 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 its net income was P53.9 billion compared with P40 billion in the same period last year backed by broad-based growth across its core businesses.

Net interest income increased to P137.4 billion with customer loans growing 7.5 percent year-on-year to P2.7 trillion and deposits expanding 12 percent to P3.4 trillion.

Non-performing loan (NPL) ratio remained stable at 1.99 percent despite the higher interest rate environment, while NPL coverage improved to 176 percent. 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 P16.2 billion in the first nine months, 10 percent higher compared to same period last year on the back of robust growth from core businesses and lower loan loss provisions. Net interest income grew by 16 percent to P39.2 billion as the 44 percent surge in top line revenues cushioned the nearly triple increase in interest expense.

Gross loans grew by 10 percent year-on-year to P765 billion, driven by the 19 percent expansion in consumer loans, particularly teachers’ loans and credit cards. Total deposits increased by 14 percent to P1.1 trillion resulting in a 49 percent 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 percent.  

Property

SM Prime reported P30.1 billion in net income in the first nine months of 2023, 37 percent higher than P22.0 billion in the same period last year. Consolidated revenues grew 26 percent to P92.6 billion from last year’s P73.7 billion.

SM Prime’s mall business, which accounts for 57 percent of consolidated revenues, posted P52.5 billion in the nine-month period, up by 37 percent from P38.2 billion in the same period last year. Mall rental income rose to P44.8 billion, 29 percent higher than last year’s P34.7 billion. SM Prime’s cinemas, event ticket sales, and other revenues increased significantly to P7.7 billion from P3.5 billion in the same period last year.

SM Prime’s primary residential business, led by SM Development Corp., reported P28.7 billion, 10 percent higher than P26.1 billion in the same period last year. SMDC’s reservation sales reached P89.3 billion, six percent higher than P83.9 billion in the same period last year.

SM Prime’s other key businesses, which include offices, hotels, and convention centers, generated P9.5 billion in revenues, up 33 percent from P7.2 billion in the same period last year. 

Portfolio investments

Portfolio investments continued to sustain growth, contributing nine percent 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 four percent to P1.5 trillion. Gearing ratio remained conservative with 35 percent net debt to 65 percent equity.