China Bank suffers 17% income drop

MANILA, Philippines—SY-led China Banking Corp. saw its profit drop by 17 percent in the first quarter, as lower interest rates resulted in a cut in trading gains.

The company on Thursday said its profit settled at P866.98 million in the first quarter. An 11.5-percent growth in loans extended in the period was not enough to make up for lower yields and lower trading gains, the company said.

Lower yields on loans led to the company’s net interest income falling 1.6 percent.

“Our first-quarter results, although lower than the previous year, was in line with our expectations,” China Bank executive vice president Ricardo Chua said in a statement.

“Our budget numbers for the year have quarterly targets that get progressively higher during the year to reflect the build-up of business volumes, especially loans, in the succeeding quarters. We will work hard to meet our goals for the year,” Chua said.

Interest rates have fallen since the start of the year partly due to rate cuts done by the central bank in 2009.

Trading gains have also dropped for the banking sector due to the lackluster performance of the local equity market since the start of the year.

Despite the lower earnings, the company said it had approved the declaration of cash dividend worth P12 per share or P1.287 billion for the holders of the company’s 107.2 million outstanding shares.

The bank likewise announced a stock-dividend declaration of 10 percent, or one share for every 10 held by shareholders, subject to the approval of the Bangko Sentral ng Pilipinas.

In the meantime, the company’s board elected Hans Sy, son of taipan Henry Sy, as its new chairman.—Paolo G. Montecillo