China Bank sees 15% profit growth in 2017

Sy-family led China Bank Corp. expects net profit to grow by 15 percent this year to P7.42 billion, sustaining the pace of growth seen last year.

This was based on the bank’s financial projection for 2017 submitted in relation to a P15-billion stock rights offering planned in April.

Return on equity is projected at 10 percent this year, bordering on the same level as the 10.4-percent return posted last year.

The bank expects to grow its loan book by 13 percent this year and to increase the share of loans to total assets to 63 percent from 61 percent last year.

With the increase in its loan book, the bank also expects to increase its loss provisioning by 52 percent.

On the funding side, China Bank expects deposits to grow by 8 percent, with the share of low-cost deposits seen to rise to 54 percent from 51 percent.

Total net revenue is being targeted to grow by 18 percent, with net interest income seen rising by 14 percent and net interest margin averaging at 3.1 percent.

On the expenditure side, China Bank projects operating expense to grow by 16 percent due to the increased headcount, additional branches and investments in infrastructure and technology.

The bank expects to spend around 60 centavos to earn a peso.

China Bank also expects to declare 30 percent of the prior year’s earnings as dividends this year, equivalent to 26 percent of projected earnings.

Last year, the bank grew net profit by 15 percent to P6.45 billion on higher interest earnings, fee-based revenues and treasury gains.

Next month, China Bank is set to raise as much as P15 billion from a stock rights offering. It plans to sell to existing shareholders as much as 497.97 million in new shares, which will be carved out of the unissued portion of its authorized capital stock.

The offer shares will be priced on April 6, while the offering will run from April 24 to May 5 this year.
Tentative listing date is on May 10. The entitlement ratio will be announced in the future. —DORIS DUMLAO-ABADILLA