Philippines: SM’s $748-million profit surge reveals the bets shaping next growth wave

SM Investments Corp., one of the largest and most prominent Filipino conglomerates founded by Henry Sy Sr., is leaning on resilient consumers, banking growth and a pipeline of large-scale property and renewable-energy projects as it navigates a more uneven Philippine economy.

SM Investments Corp. (SMIC) reported an 8-percent increase in consolidated net income to ₱45.9 billion ($748 million) in the first half of 2026, up from ₱42.6 billion a year earlier, as steady consumer demand and growth across its diversified businesses helped offset pressure in parts of the portfolio.

Consolidated revenues rose 6 percent to ₱339.2 billion from ₱319.2 billion.

Banking remained the group’s largest earnings contributor, accounting for 47 percent of net income. Property contributed 27 percent, retail 15 percent and portfolio investments 11 percent.

The results underline the importance of SMIC’s broad business model, which spans banking, property, retail, mining, logistics and energy.

Franklin Gomez, the group’s executive vice president, said the portfolio allowed stronger businesses to cushion weaker segments during a challenging period.

“If there’s anything that’s been highlighted by our performance, it’s the strength of the portfolio of businesses that we have,” Gomez said during the company’s first-half results briefing.

Consumer spending holds up

SM Retail posted a 5-percent increase in net income to ₱8.9 billion, while operating income rose 12 percent to ₱14 billion. The retailer benefited from steady sales across its supermarket and minimart formats, as well as stronger demand for home, fashion and children’s products.

SM’s mall business also remained resilient. Revenues increased 8 percent to ₱41.8 billion, supported by higher occupancy, stronger tenant sales and improved operating efficiency.

SM President and Chief Executive Officer Frederic DyBuncio said consumer spending had remained healthy despite economic headwinds, including higher fuel prices and weaker investment and government spending.

“The Filipino consumer was tested during the first half of the year, but our businesses proved to be resilient,” DyBuncio said in a media statement.

The group’s banking businesses recorded loan growth, preserving their position as SMIC’s main earnings engine. Portfolio investments also improved, partly because of a turnaround at Atlas Consolidated Mining and Development Corp. amid higher copper prices.

Mining exit remains on the agenda

Despite the stronger contribution from Atlas, SMIC continues to plan its exit from the mining sector.

DyBuncio said the group intended to transfer its mining assets, including its roughly 34-percent stake in Atlas, to another listed company within the SM group. The restructuring and transfer could take place next year.

“The intention for SMIC is to completely move out from the mining sector,” DyBuncio said.

The planned move would allow SMIC to concentrate more closely on its core platforms—banking, property and retail—while retaining mining exposure elsewhere in the group.

Renewable energy becomes a strategic bet

Renewable energy is emerging as one of SMIC’s most important long-term growth opportunities.

Its geothermal arm, Philippine Geothermal Production Co. Inc. (PGPC), posted a 6-percent increase in first-half revenue to ₱2.5 billion and recorded net income of ₱1 billion, according to the Philippin News Agency.

PGPC operates the Mak-Ban steam fields in Laguna and Batangas and the Tiwi steam fields in Albay, with current geothermal generation capacity of up to 400 megawatts.

The company is also working to develop 6 additional concessions.

'Bright spot'

SMIC executives have described renewable energy as a potential “bright spot” as electricity demand rises and the group seeks more stable, long-term sources of growth.

The strategy is significant because geothermal power can provide baseload electricity, complementing intermittent sources such as solar and wind.

The group’s energy ambitions also connect with its wider property and infrastructure businesses, which require reliable power as SM expands malls, offices, residential communities and integrated townships.

Projects that could reshape SM: Pasay 360 and the next Manila Bay district

SM Prime’s 360-hectare Pasay reclamation and integrated property development is arguably the group’s most transformative project.

The planned estate, connected to the Mall of Asia complex, is envisioned as a large mixed-use district combining commercial space, offices, residences, hotels, entertainment and convention facilities.

The development is expected to become a long-term growth engine for SM Prime and could expand the Mall of Asia area into a broader business and lifestyle district.

Reclamation works have been completed, with turnover targeted by 2028, according to reporting citing property-sector analysts.

Provincial expansion

SM is also continuing to expand outside Metro Manila. The group’s provincial strategy includes new malls, retail outlets, residential developments and banking locations designed to capture rising consumption in emerging urban centres.

GMA News reported that SMIC would maintain its provincial expansion plans despite changes to its capital-expenditure guidance. Gomez said the group was not scaling back its focus on regional growth.

This strategy is important because it allows SM to build an ecosystem around new markets: malls generate foot traffic, banks provide financing, retailers serve households, and property projects create offices and residences.

Transport links around major malls

SM Prime has also been investing in transport connections around its property network. Projects include a direct pedestrian link between the LRT-2 Antipolo station and SM City Masinag, as well as busway-concourse projects modelled on the SM North EDSA facility.

These projects may seem insignificant, but they address a major weakness of Philippine urban development: the gap between commercial centres and public transport.

Better connections can increase accessibility, improve foot traffic and make malls function more like transport-linked community hubs.

Logistics and inter-island connectivity

2GO Group Inc. recorded revenue growth across its businesses, helped by higher passenger volumes and increased logistics demand linked partly to online purchases.

The business gives SM exposure to the movement of people and goods across the archipelago, complementing its retail and property operations.

The group has also highlighted new routes and stronger performance across 2GO’s business lines as part of its broader portfolio strategy, as per Market Screener.

Strong balance sheet

SMIC ended the first half with total assets of ₱1.82 trillion and a capital structure of 31 percent net debt and 69 percent equity. DyBuncio said the company would continue investing while maintaining discipline in capital allocation.

The group’s outlook rests on several assumptions: inflation will ease, household consumption will remain resilient, loan demand will continue, and large projects such as Pasay 360 and the renewable-energy pipeline will mature over time.

That creates both opportunity and risk. Consumer-facing businesses are supporting earnings today, while property, infrastructure and energy projects are intended to produce the next phase of growth.

Their success, however, will depend on interest rates, construction costs, regulation, power demand and the broader Philippine economy.

SMIC shares rose ₱16, or 2.66 percent, to close at ₱618 on Wednesday, outperforming the benchmark Philippine Stock Exchange index, which gained 0.63 percent.

The market’s response suggests investors are rewarding SM’s earnings resilience.

The bigger test will be whether the conglomerate can convert that resilience into sustained growth through its next generation of projects.