Buoyed by gains from the sale of marketable securities and global depositary receipts, listed investment holding firm SM Investments Corp. (SMIC) reported an 85 percent jump in net income to P5.1 billion in the first half of the year.

In a financial report filed with the Philippine Stock Exchange (SEC), SMIC said excluding extraordinary items, net recurring income rose by only 26 percent to P2.9 billion, driven by strong retail sales and mall operations.

Consolidated revenues went up by 11.1 percent to P27.8 billion. Of the total, 70 percent was accounted for by merchandise sales, which increased by seven percent. Rental income which accounted for 17.5 percent of total revenues, improved to P4.9 billion or 17 percent higher than the year ago level.

Revenues from cinema operations amounted to P1.1 billion or an increase of 16 percent from the previous level while management and other fees and dividends surged 50 percent to P0.4 billion and 31 percent to P0.6 billion, respectively.

SMIC also gained from improved efficiencies which kept a tight lid on operating expenses and improved margins. Interest expense decreased by five percent to P1.5 billion while operating expense grew by only 7.5 percent to P5.9 billion.

As a result, operating income rose 18 percent to P6.4 billion. This translates to an operating margin of 23 percent during the period from 21.6 percent a year ago.

EBITDA, on the other hand, amounted to P7.7 billion, up 18.6 percent.

Commenting on SMIC’s robust performance, SMIC president Harley Sy said: ‘We are encouraged by the continued growth, profitability, and stability of SM, especially now that it has evolved into one of the country’s largest conglomerates. New doors constantly open for us and we approach them with cautious optimism. We always look for new avenues to improve our products and services to meet the demands of the Filipino community, who we thank for showing strong faith in SM as a group.’

In terms of its four major lines of business, retail operations accounted for the bulk of the group’s revenues with a contribution of 73 percent to total followed by its mall operations which contributed 20 percent.

Real estate, a relatively new but emerging segment for SM, contributed two percent to total revenues. Sales revenues, in fact, grew more than nine-fold as portions of the high-rise residential condominium projects of SM Development Corp. and Highlands Prime Inc. were completed, and sales which went higher than expected were booked during the period.

Banking and financial services and others accounted for 5.3 percent of total revenues and 19 percent of net income.

Jose Sio, SM executive vice president for Finance, said ‘the difference in revenue and net income profiles underscore the importance of SM’s upward integration toward higher value-added businesses in mall operations, banking, and real estate as they emerge and provide SM with opportunities to take advantage of wider margins. The retail operations, on the other hand, provides the essential liquidity to fuel the growth and stability of the whole group.’

SMIC’s main banking unit Banco de Oro, now the fifth largest bank in terms of resources, earned P1.3 billion, up six percent during the first half. Net interest income grew by 15 percent to P3.8 billion, funded by the 44 percent hike in deposits to P201 billion. Net loans and other receivables jumped 33 percent to P115.4 billion, while non-performing loans declined even further from P4.9 billion to P4.6 billion.