CHINA BANKING Corp. (China Bank) posted higher net earnings in the third quarter as its core businesses continued to grow despite the coronavirus pandemic.

China Bank’s net income reached P3 billion in the third quarter, higher by 21% compared with the P2.5 billion posted in the comparable year-ago period, the lender said in a disclosure to the local bourse on Thursday.

This brought its net profit for the first nine months to P8.2 billion, 23% bigger than the P6.7 billion it booked in the same period in 2019.

This translated to a return on equity of 11.15%, up from 9.92% the previous year.

The bank’s assets stood at P1 trillion at end-September, P60 billion more than the year-ago level and also beyond China Bank’s year-end target, it said. This resulted in a return on assets of 1.11%.

“The year 2020 has been very challenging, but with the hard work and commitment of our employees, we are able to pull through and provide the needed banking services and support to our clients,” China Bank President William C. Whang was quoted as saying.

“We are still expecting continuing challenges from a difficult environment, and the results give us the buffer to absorb further stresses down the road.” Mr. Whang said.

China Bank’s net interest income jumped 35% to P25 billion in the first nine months from P18.7 billion a year ago, which it attributed to a 36% decrease in its interest expense. This resulted in a net interest margin of 3.89%.

The bank said its fee-based income also rose 35% to P7 billion on the back of an almost fourfold increase in trading gains and as income from its trust business grew 15%.

China Bank’s loan portfolio rose 6% to P595 billion as of September, while deposits with the bank also climbed 6% to P827 billion. This resulted in a loans-to-deposit ratio of 72% for the period.

Even as its lending book continued to grow, asset quality remained healthy, with the bank’s nonperforming loan (NPL) ratio at 2.5% as of September. Meanwhile, NPL cover was at 104%.

The lender’s loan loss reserves amounted to P6.3 billion, 12 times bigger than the year-ago level. China Bank said it hiked its provisions for possible credit losses amid the anticipated impact of the coronavirus pandemic and lockdown measures on asset quality, adding it “continues to work with borrowers experiencing financial difficulty under the current circumstances.”

Meanwhile, China Bank’s operating income exclusive of trading gains climbed 24% to P28 billion in the first nine months, while operating costs went up 6% to P16 billion. This caused its cost-to-income ratio to improve to 51% from 65% last year.

The bank said its capital grew 9% to P101 billion, with its common equity Tier 1 ratio standing at 13.08% and its total capital adequacy ratio at 13.99%, both above the regulatory requirements.

“Amid the pandemic, China Bank’s capital and liquidity position remains strong. We continue to productively deploy resources to drive strategic growth, finance our clients’ needs, and contribute to the country’s economic recovery,” China Bank Chief Finance Officer Patrick D. Cheng was quoted as saying.

China Bank’s shares closed at P21.60 apiece on Thursday, down by five centavos or 0.23% from its previous finish. — K.K.T. Jose