Chinabank Savings targets to boost income to P2.15 billion

CHINABANK SAVINGS, Inc. (CBS), the thrift banking arm of listed China Banking Corp. (Chinabank), is targeting to post a net income of P2.15 billion for this year, its top official said.

CBS’ net earnings rose by 17% year on year to P1.85 billion in 2023, it previously said.

The thrift lender recorded a net profit of about P462 million in the first quarter, which was a 10% increase from the same period last year, CBS President James Christian T. Dee told reporters on Thursday.

“Actually, for 2024, as in prior years, we’ve basically relied on our loan growth, mostly in the consumer loans sector, and that’s basically driven our forecast for the next five years,” Mr. Dee said on the sidelines of their annual stockholders’ meeting.

“In terms of client base, we’re expected to maintain more or less the same combination of clients, mostly from the consumer and retail market,” the official added.

Chinabank Savings’ total loan portfolio grew by 24% to P120.2 billion in the first quarter, P56.1 billion of which were automatic payroll deduction loans, while P46.8 billion were consumer loans.

Mr. Dee said CBS aims to grow its loan portfolio to P130 billion this year and to P151 billion in 2025, backed by its retail banking segment.

CBS’ loan growth could also be supported by the expected start of the Bangko Sentral ng Pilipinas’ (BSP) easing cycle, he said, adding they see at least one 25-basis-point (bp) cut from the regulator this year.

“As most economists are forecasting, we’re hoping that inflation will ease in the second half of this year, and hopefully, the BSP will likewise follow with its monetary policy… It will actually be good for us if our rates go down. We’re more than ready to fund our loan growth with our value depositors, and we should be on track until the end of the year,” Mr. Dee said.

The bank’s total deposits grew by 24% year on year to P142.5 billion in the first quarter, with P46.4 billion of the total being low-cost current and savings account deposits.

The BSP’s policy-setting Monetary Board has kept its benchmark rate steady at a 17-year high of 6.5% since October 2023 following increases worth 450 bps to bring down inflation.

Its next meeting is on June 27.

Headline inflation picked up to 3.9% year on year in May from 3.8% in April, but marked the sixth straight month that inflation settled within the BSP’s 2-4% target band.

From January to May, the consumer price index averaged 3.5%, matching the central bank’s full-year forecast.

The BSP expects inflation to continue quickening and possibly breach their 2-4% annual target until July due to base effects.

BSP Governor Eli M. Remolona, Jr. has said the central bank can begin easing their policy stance as early as August, with a total of 25-50 bps in cuts likely within the second half as they have become “less hawkish.”

Mr. Remolona said the BSP does not need to wait for the Fed to begin cutting rates. The Fed held interest rates steady for a seventh straight meeting last week, with expectations of the start of rate cuts being pushed to as late as December.

Meanwhile, Finance Secretary and Monetary Board member Ralph G. Recto last week said it is “highly probable” that the BSP will only begin easing its policy stance once the Fed does so.

Mr. Recto previously said the Monetary Board could cut rates by as much as 150 bps in the next two years.

CBS’ asset quality is also expected to remain stable, Mr. Dee said.

“We’ve been fortunate to be able to manage our NPL (non-performing loan) level quite well… Our NPL [ratio] used to be more than 4%, now it’s about 3% as of the first quarter,” he added.

CBS Chairman Ricardo R. Chua added that he expects the thrift bank’s growth to continue to be driven by the consumer sector, especially with the Philippine demographic being very young.

“We see a lot of workforce coming to the game, and there will be demand from them. So, growth is definitely going to happen… That’s an advantage for consumer banks like us,” Mr. Chua said.

“Because they are very young, it will be easier for them to adapt to digital technology… We think we have done a lot of work in that area, and we will continue new initiatives to make sure we can respond to their needs,” he added.

He said digital is the “way to go” as consumers now want to be able to access banking services at any time.

CBS’ parent bank Chinabank saw its net income grow by 17.72% year on year to P5.9 billion in the first quarter.

Its shares closed at P39.50 apiece on Thursday, dropping by 40 centavos or 1% from the previous day.