China Bank books flat net income in first half

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CHINA BANKING Corp. (China Bank) saw its net profit unchanged in the first half of the year even as recurring income grew amid lower fee-based revenues.

In a statement on Wednesday, the Sy-led lender said it booked a net income of P3.6 billion in the January-June period, unchanged from the same period last year.

The bank’s recurring income came in at P13.3 billion, 15% higher year-on-year due to “sustained growth” in core businesses.

Total operating income stood at P13.1 billion, up 7% from the comparable year-ago period.

China Bank’s loans grew to P469.4 billion as of end-June, up 18% from the same period in 2017, on the back of strong demand across all segments, with its consumer lending business growing 21%.

The bank’s net interest margin improved to 3.16% from the previous 3.07% as improving loan yields offset the rise in funding costs, it said.

Meanwhile, its non-preforming loans (NPL) dropped 4% or by P314 million, which led to an improved NPL ratio of 1.5%.

“Tighter loan monitoring and remedial efforts enabled the bank to maintain asset quality amid loan expansion,” China Bank said.

NPL coverage improved to 107% at the consolidated level from 93% in the previous year.

On the other hand, deposits climbed 18% to P653.4 billion on the back of a 32% increase in low cost funds to P374.6 billion.

Its loans-to-deposit ratio remained healthy at 72%.

Meanwhile, China Bank’s fee-based revenues declined 32% to P2.1 billion in the first semester as it reduced its reliance on securities trading.

Overall, the lender’s total assets expanded 17% to P768.4 billion.

Total capital funds climbed 4% to P83.6 billion at end-June. China Bank’s capital adequacy ratio stood at 13.3%, while its common equity Tier 1 ratio was at 12.6%, well above the minimum regulatory requirements.

Last month, China Bank raised P10.25 billion from the first tranche of its P20-billion long-term negotiable certificates of deposit program.

Proceeds from the fund raising activity will be used to support the bank’s expansion program and other initiatives.

China Bank shares went down 15 centavos or 0.45% to close at P33 apiece on Wednesday. — K.A.N. Vidal