China Bank nets P7.4B

Sy family-led China Banking Corp. grew its net profit last year by 15 percent to P7.4 billion on the back of sustained growth in core lending and fee-based businesses.

This translated to a return on equity of 9.9 percent and return on assets of 1.11 percent, the bank disclosed to the Philippine Stock Exchange on Friday.

China Bank president William Whang said: “2017 was a pivotal year in the transformation and development of the China Bank group. We grew as projected and I am pleased that our strong fundamentals and solid organic growth gave us the platform to meet the opportunities and challenges in 2018.”

The bank’s net interest income rose by 17 percent year-on-year to P20 billion, driven by the 17-percent growth in loan portfolio and stable net interest margin of 3.09 percent.

Its loan book grew by P65 billion to P454 billion due to strong demand across all segments, particularly consumer loans, which jumped by 25 percent, and corporate loans, which rose by 19 percent.

Despite the loan expansion, the bank maintained its asset quality with tighter loan monitoring and remedial efforts. Non-performing loans (NPL) dropped by 12 percent, leading to an improved NPL ratio to total loans of 1.4 percent.

For every peso of consolidated NPLs, the banking group set aside 97 centavos as loss buffer, up from 91 centavos from the previous year while at the parent level, the buffer amounted to P1.69 per peso of NPL compared to P1.53 in the previous year.

On the funding side, total deposits rose by 17 percent to P635 billion, boosted by the efforts of new branches. Low-cost funds increased by 24 percent to P343 billion, accounting for 54 percent of total deposits.

For every P1 generated as deposits, the bank turned 71 centavos into earning assets through its lending activities.

Non-interest income, on the other hand, improved by 20 percent to P6 billion due to higher service fees and commissions, trust revenues, foreign exchange gain, and income from acquired assets.

Core operating income, excluding trading gains and non-recurring income, grew by 18 percent, which the bank said was reflective of the strength of the bank‟s core business drivers and the substantial improvement in the contribution of subsidiaries.

Meanwhile, thrift banking arm China Bank Savings tripled its net income, sustaining the momentum of its turnaround to full profitability in 2016.

Investment house subsidiary China Bank Capital, for its part, recorded a 25-percent earnings growth from increased participation in capital market deals.

Overall, the bank’s balance sheet expanded by 19 percent to P752 billion last year. Total capital funds grew by 32 percent to P84 billion with the P15-billion stock rights offer completed last May
2017.

Common equity tier 1 (CET 1) and total capital adequacy ratios stood at 13.47 percent and 14.23 percent, respectively, well above the minimum requirement of 6 percent and 10 percent, respectively.