China Bank net profit up 8% to P3.64B

Sy family-led China Banking Corp. grew its nine-month net profit by 8 percent year-on-year to P3.64 billion as higher interest earnings made up for the slack in trading gains.

This translated to a return on equity of 8.35 percent and a return on assets of 1.02 percent, the bank said in a regulatory filing Friday.

Net interest income increased by 8 percent year-on-year to P11.17 billion as revenues from loans rose while interest expense fell as as a significant block of high-cost funds (time deposits) was replaced by low-cost checking and savings accounts, which grew by 16 percent. Net interest margin thus improved to 3.36 percent from 3.23 percent for the same period last year.

Noninterest income dipped by 3 percent year-on-year to P2.96 billion as trading gains declined by 5 percent year-on-year to P365.22 million. The impact of the decline in treasury gains was tempered by the 15-percent jump in earnings from service charges, fees and commissions, which stood at P1.38 billion.

Total operating income amounted to P14.12 billion, up 5 percent year-on-year. The growth in operating expenses—excluding provision for impairment and credit losses—was controlled at 6 percent to P9.21 billion even as the bank invested in new technologies, more branches, ATMs (automated teller machines) and people. In the third quarter, the bank migrated to a new core banking solution.

Total assets expanded by 4 percent year-on-year to P472.06 billion, tracking the growth of core businesses.

The bank expanded its loan book by 5 percent to P287.43 billion, driven by the strong growth of consumer and commercial loans, which gained 24 percent and 11 percent, respectively. Total deposits inched up by 2 percent to P392.07 billion, underpinned by the 16-percent increase in low-cost deposits to P218.08 billion, which now accounted for 55.62 percent of total deposits versus 48.79 percent a year ago.
Doris Dumlao-Abadilla