CHINA Banking Corp. booked a higher net profit in the first three months of 2022 as interest earnings improved and loan loss provisioning declined.

The lender’s net income was at P4.9 billion in the first quarter, rising 37% from the P3.6 billion in the same period of 2020, it said in a statement on Thursday.

This translated to a return on equity of 16%, while return on assets stood at 1.7%.

China Bank’s net interest income rose 15% to P10.8 billion from P9.3 billion in the same period of 2021. This was driven by the 11% growth in interest income to P12.6 billion and the 8% decline in interest expense to P1.9 billion.

Net interest margin improved to 4.3%.

Meanwhile, fee-based income fell 50% to P1.7 billion in the first quarter from P3.4 billion a year prior. This was dragged by lower trading gains which offset the improvement in service charges, fees, commissions, and trust fees.

The lender’s revenues decreased 2% to P12.5 billion from P12.7 billion.

For the first quarter, China Bank’s operating expenses dropped 8% to P5.7 billion from P6.2 billion a year earlier. This improved the lender’s cost efficiency ratio to 46%.

Meanwhile, gross loans jumped 10% to P632 billion as of end-March, driven by higher demand from both corporate and consumer borrowers.

China Bank’s non-performing loan (NPL) ratio was steady at 2.5% as of end-March, which it noted is lower than industry average. NPL coverage increased to 119%.

Amid an improved economic outlook, the bank cut its loan loss reserves by 65% to P780 million.

The bank’s assets increased 12% to P1.1 trillion as of end-March.

Meanwhile, deposits rose 8% to P879 billion, with its checking and savings account ratio at 64%.

“Our effective asset-liability management and solid capital structure have allowed clients to access our balance sheet and enabled us to achieve better-than-industry growths in assets, loans, and equity,” China Bank Chief Finance Officer Patrick D. Cheng said.

“Moreover, the growth of CASA deposits continued to improve our funding cost.”

The bank’s total equity rose 15% to P125 billion as of end-March. With this, its common equity Tier 1 ratio and capital adequacy ratio stood at 15.5% and 16.3%, respectively, both above minimum regulatory requirements.

“We are determined to expand our business to CASA and launch growth and to future-proof our growth by focusing on asset quality, digital banking, transformation, and ESG implementation,” China Bank President William C. Whang said at the bank’s virtual annual stockholders’ meeting on Thursday.

He said the bank will also continue their digitization efforts to allow new customers to open an account online.

China Bank’s shares closed at P27.50 apiece on Thursday, up 80 centavos or 3% from its previous finish. — Luz Wendy T. Noble