Sy family-led China Bank grew its net profit last year by 24 percent to P10.1 billion on the back of higher earnings from core lending and fee-based businesses alongside treasury gains.
This translated to an improved return on equity of 11.04 percent and a return on assets of 1.1 percent, the bank disclosed to the Philippine Stock Exchange on Friday.
China Bank president William Whang said 2019 “was an outstanding year for China Bank. Our financial performance exceeded our projections and puts China Bank, 100 year-strong this year, in a better position to meet the opportunities and challenges ahead.”
Net interest income went up by 14 percent to P26.1 billion while fee-based income jumped by 49 percent to P8.4 billion, boosted mainly by service charges, fees and commissions and trading and securities gains.
However, total operating cost rose by 13 percent to P20.3 billion due to the ongoing upgrading of systems, processes, infrastructure and manpower.
The bank spent 59 centavos for every peso that it earned that year, more efficient than the 63 centavos spent in the previous year. This, as operating income significantly increased even as the bank continued to invest heavily in improving customer service.
Total resources grew by 11 percent to P962 billion, in line with China Bank’s goal of breaching P1 trillion in assets this year.
The bank expanded its loan book by 13 percent to P578 billion, driven by higher demand across all segments. Consumer loans, which accounted for almost a fifth of the bank’s total loan portfolio, grew by 23 percent to P107 billion.
In terms of asset quality, bad loans stood at 1.5 percent of total loans. For every P1 worth of bad loan, the bank set aside P1.29 as buffer for potential loss.
On the funding side, total deposits jumped by 7 percent to P775 billion, supported by the P11-billion growth in low-cost deposits. The issuance of P30-billion retail bonds and $150-million green bonds also improved the bank’s funding flexibility in 2019.
The year ended with total capital at P96 billion, up by 9 percent. Common equity tier 1 ratio stood at 12.8 percent while total capital adequacy ratio was at 13.7 percent, well above regulatory requirements.
China Bank recently received approval from the Bangko Sentral ng Pilipinas to raise up to P15 billion through peso-denominated tier 2 capital notes. These notes would be issued in one or more tranches and would be used to fund its expansion program and strategic initiatives.
Last year, the bank engaged Microsoft to help develop its digital transformation strategy and road map for delivering enhanced customer experience and for future-proofing its operations. In the next two years, it is targeting to roll out key digital and automation projects to support its goals of business growth, customer centricity, operational excellence and employee engagement. —DORIS DUMLAO-ABADILLA