By Imee Charlee C. Delavin, Reporter

China Bank net profit improves in Q1

Posted on May 06, 2016

NET INCOME of China Banking Corp. (China Bank) expanded by more than a tenth in the first three months of the year as all areas of its businesses continued to grow.

The Sy-led bank’s net profit for the first quarter of 2016 was up 15% to P1.39 billion from 2015’s P1.21-billion earnings, on the back of steady growth of its core businesses and a 27% increase in non-interest revenues, it reported during its annual stockholders meeting yesterday.

China Bank said its earnings translated to a 9.23% return on equity, or the net income earned as a percentage of stockholder investment, while return on assets, or net income as a percentage of total assets, was at 1.05%.

Net revenues before operating expenses grew 10% to P5.27 billion, with net interest revenues up 6% to P3.92 billion, driven by the 11% growth in its loan portfolio.

Its non-interest revenues rose 27% to P1.35 billion, boosted by significantly higher trading gains trust fees, and income from sales of acquired assets.

“The growth in total operating expenses was manageable at 8.9% to P3.6 billion, even as China Bank continued its network expansion and embarked on new product initiatives,” the bank said.

The bank said although the 11% growth in loans during the January to March period to P318 billion was “somewhat below the industry trend,” 68% of the growth was accounted for by the consumer and commercial segments.

China Bank President and CEO Ricardo R. Chua said: “We are gratified with the double digit growth in our first quarter results. Our strategic thrusts of sustaining our core businesses and strengthening our fee-based businesses even as we continue to expand our network are starting to bear fruit.”

China Bank maintained its balance sheet strength, growing in all areas of operation. Its total assets expanded by 14% to P543.07 billion while total deposits with the bank rose 11% to P452.52 billion, with low-cost current account, savings account (CASA) deposits growing 15% to P225.91 billion, improving the CASA-to-deposits ratio to 50% from last year’s 48%.

Its loans-to-deposit ratio stood at 70%.

China Bank’s capital base as of end-March stood at P61.54 billion, while its total capital adequacy ratio -- a measure of a bank’s financial strength -- stood at 13.97% still above the central bank’s 10% minimum requirement while its minimum common equity Tier 1 (CET1) ratio of 13.05% also exceeded the minimum CET1 ratio of 8.5%.

In the first three months of the year, the Sy-led bank opened three China Bank and one China Bank Savings (CBS) branches as part of the planned 45 new branches for the year. As of end-March, it has a consolidated branch network of 521 -- 355 China Bank and 166 CBS branches.

China Bank, the country’s eighth largest bank in asset terms as of Dec. 31, 2015, pulled in a consolidated net income of P5.63 billion, 10% higher than its earnings the previous year.

The bank’s shares closed at P39.90 apiece yesterday, giving up 30 centavos or 0.75% from Wednesday’s close.