Fitch rates new Security Bank notes BB-

Fitch Ratings said it has assigned Philippines-based Security Bank Corp.'s proposed PHP2.5 billion subordinated notes issue due 2014 a BB- rating.

The agency has also assigned the bank long-term foreign and local currency ratings, both at BB, as well as a short-term foreign currency rating of B.

The outlook is stable.

Fitch said Security Bank Corp.'s ratings reflect its sound balance sheet as well as notable asset quality problems. In particular, its mid-2003 non-performing loans and foreclosed assets both stood at 20% of total loans and foreclosed assets (versus the industry average of 28%), for which reserves coverage was somewhat limited.

However, any shortfall in reserves should be largely coverable over the next two years by earnings, which, while not compelling, are above-average. As such, impairment of the bank's substantial equity base - 15.7% of assets - is unlikely.

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