HENRY SY-LED China Banking Corp. (China Bank) saw its bottom line grow by a tenth in the first semester of the year, on the back of its robust loan operations and core recurring income.In a disclosure to the Philippine Stock Exchange on Thursday, China Bank reported its net profit reached P3.6 billion in the January to June period, jumping by 10% from the P3.27 billion recorded in the same period a year ago.

“The results for the first half of the year is an encouraging indication of China Bank team’s ability to execute on our strategic direction of strengthening our core businesses while achieving revenue diversification,” China Bank President and Chief Executive Officer Ricardo R. Chua was quoted saying in a statement.

“The network expansion started 10 years ago continues apace, while the substantial investments in recent acquisitions and subsequent integration are starting to bear fruit,” he added.

China Bank said net interest revenues rose 16% year-on-year to P9.2 billion, while non-interest revenues increased by 6% to P3.1 billion, after a drop in trading gains was offset by the expansion in service charges, fees from bancassurance, investment banking and trust and income from asset sales.

Stripping out trading gains and one-off items, operating income rose 18% year-on-year in the January to June period which mirrored strong growth in earnings from its core businesses.

The listed lender’s gross loans portfolio expanded faster than the banking sector’s performance by 22% to P401.7 billion on the back of strong growth across all loan segments.

Consumer loans jumped 25% in both the China Bank and its thrift banking arm, China Bank Savings the first six months of the year, while commercial loans grew by a tenth.

“Loans to the corporate segment also rose by a better-than-expected 25% as the bilateral loans generated by the Institutional Banking Group were boosted by bookings arising from deals generated by China Bank Capital, which has continued to reinforce its presence in the corporate market,” the Henry Sy-led bank said.

After its loan operations expanded during the six-month period, its asset quality improved in both absolute amounts and non-performing loans (NPL) ratio of 1.81% during the period, much better from the sector’s average of 1.94%.

The lender’s consolidated NPL coverage ratio was at 92.8%, better from industry average at 155.6%.

Likewise, China Bank’s total assets hit P657.5 billion in the first half of the year, an 18% growth year-on-year after its consumer base and market share also expanded after it put up additional branches during the period. To date, the lender has a total of 563 branches, of which 156 branches are of China Bank Savings.

“The savings bank’s branch network alone is now bigger than the 148 branches of China Bank before its expansion phase triggered by the acquisition of Manila Bank in 2007,” it stated.

Meanwhile, the bank’s operating expenses jumped 12% to P7.5 billion in the first half of the year on the back of branch and distribution network expansion as well as investments in technology and people to boost its new businesses. Cost-to-income ratio stood at 60.91% in the January to June period, improving from the 61.37% in the same period in 2016.

China Bank said capital ratios improved in the first half due to its P15-billion stock rights offer last May, with common equity Tier 1 ratio at 14.65% and total capital adequacy ratio at 15.5%.

In March 22, the listed lender secured the PSE’s approval for its P15 billion capital buildup program, which the bank offered up to P483.871 million shares to its stockholders as of April 19. Each shareholder has one rights share for every 4.1375 existing common share of the bank.

“We have raised our capital funds to support robust growth in all businesses in the next few years,” China Bank Executive Vice President and Chief Operating Officer William C. Whang was quoted saying in a statement.

“We will continue to build our fee-based businesses while pursuing growth in market share. We are happy to see steady progress in high-growth and better-yielding consumer market,” he added. — Janine Marie D. Soliman

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