CHINA BANKING Corp. (China Bank) saw its net profit rise slightly in the first quarter of the year amid growth in its core businesses.
In a disclosure to the Philippine Stock Exchange on Friday, the Sy-led China Bank said its consolidated net income rose to P1.5 billion in the January-March period, 2% higher compared to the same period in 2017.
Despite logging tepid profits, China Bank said the growth on its core businesses was sustained in the first three months as operating income grew 9% to P6.14 billion.
Net interest income also climbed 18% to P5.29 billion, mainly driven by the 20% growth in its gross loan portfolio.
Total deposits rose to P613.64 billion in the first quarter, up 16%, driven by the growth of its current and savings accounts (CASA) to P338.73 billion by 24%. CASA ratio improved to 55%, while loans-to-deposit ratio stood at 73%.
Non-interest income, which excludes trading gains, grew 6% to P1.14 billion last quarter on the back of increase in service charges, fees from investment banking and income from foreign exchange gains.
Core recurring income, or operating income excluding trading gains, rose 16% to P6.44 billion in the first quarter from P4.24 billion in the comparable year-ago period.
“As China Bank carried out its expansion program by investing in new branches, more people, and up-to-date technology to support the growth of new businesses, operating expenses increased 13% to P4.24 billion,” the bank added.
Overall, total assets expanded by 16% to P722.63 billion from the P620.4 billion tallied in the same period last year.
“We are working hard to meet our goals for the year, focusing on sustainable earnings through our core businesses of loans and deposits and strengthening our fee-based revenue streams,” China Bank president William C. Whang was quoted as saying in the statement.
China Bank’s asset quality metrics further improved even as its lending business is growing “robustly.” Nonperforming loans (NPL) dropped P1.31 billion, which led to an improved 1.32% NPL ratio. The lender’s loan loss coverage, on the other hand, jumped to 149% compared with the 121% industry average.
The lender’s total capital funds stood at 27%, equivalent to a 13.65% total capital adequacy ratio, with common equity tier 1 ratio of 12.79%.
Last month, China Bank said it is eyeing to conduct fund-raising activities, raising P50 billion through a combination of long-term negotiable certificate of deposit (LTNCD), retail bonds and/or commercial papers.
Like regular time deposits offered by banks, LTNCDs offer higher interest rates. However, LTNCDs cannot be pre-terminated but can be sold on the secondary market, making them “negotiable.”
China Bank said the peso-denominated program will be used to fund the bank’s initiatives and expansion, particularly its lending business.
“This program will be used to fund the bank’s strategic initiatives and expansion, specifically in relation to the expected growth in the lending business,” China Bank’s earlier disclosure to the bourse read.
Shares in China Bank grew 20 centavos or 0.57% to close on Friday at P35 apiece from P34.80 the previous day. — K.A.N. Vidal