China Bank’s H1 net profit up 14%

SM-led China Banking Corp. grew its net profit in the first semester by 14 percent year-on-year to P2.51 billion mostly on higher loan volume and improved margins.

This performance translated to a return on equity (ROE) of 8.67 percent and a return on assets (ROA) of 1.06 percent, China Bank disclosed to the Philippine Stock Exchange on Thursday.

Net interest income was up by 9 percent year-on-year to P7.42 billion for the first six months on the back of higher loan volume and lower interest expense, which dropped by 9 percent to P2.06 billion. This resulted in an improved net interest margin of 3.36 percent for the first six months.

Meanwhile, non-interest income likewise rose by 4 percent to P2.05 billion from higher trading gains as well as fees and commissions.

Total assets increased by 5 percent year-on-year to P479.29 billion, driven by loans and deposit growth. Net loans expanded by 10 percent year-on-year to P289.32 billion, underpinned by a 26 percent increase in consumer loans.

As total deposit growth remained steady at 3 percent, the bank’s low-cost deposits -referring to checking and savings accounts (CASA) – rose by 14 percent to P202.50 billion and replaced a significant block of high-cost funding, thus improving the funding mix and reducing interest expense. The CASA to total deposits ratio improved to 50.70 percent versus 45.63 percent a year ago, while the loans to deposit ratio was at 72.43 percent, rising from 68.11 percent.

The bank’s income before tax reached P3.20 billion, up by 11 percent. Operating income grew by 8 percent year-on-year to P9.47 billion. While pursuing its expansion plans, the increase in operating expenses excluding loan-loss provision were controlled at 6 percent year-on-year to P6.01 billion. China Bank said this reflected its effective cost management, in turn lead to an improved cost efficiency ratio of 63.46 percent from 65.01 percent.

With the sustained expansion of its loan portfolio, China Bank increased its provision for credit losses by 37 percent to P255.59 million.

Total capital funds rose by 6 percent year-on-year to P58.81 billion. The bank’s core equity tier 1 and total capital adequacy ratios stood at 13.58 percent and 14.49 percent, respectively.