China Bank earnings grow 7% to P703M in 1st qtr

China Banking Corp., a banking unit of the Sy-owned SM Investments Corp., reported a P703-million net income  in the first three months of the year, a seven percent increase from the profit level in the same period a year earlier, a ranking bank executive said.

Ricardo Chua, China Bank executive vice president and chief operating officer told reporters at the sidelines of the bank’s annual stockholders meeting last week that the entire banking industry would likely experience flat to modest growth in net earnings this year.

“We do not expect earnings to grow as fast as in 2007,” he said, adding that  most commercial banks will feel the pinch as commercial lending lags behind an improving consumer market.

Most banks have, in fact, reported lower earnings in their financial statements for the first three months of 2008 compared with the same period in 2007, he said.

Chua noted that interest rates have been volatile, eating into the bank’s net earnings and are not expected to improve in the near future. Thus, he said the first quarter performance of most banks will again be reflected in the first semester.

Nonetheless, he expressed optimism on the prospective gains in the bank’s consumer lending which expanded 41 percent last year, although commercial lending grew by a slower but still respectable 22 percent clip.

The bank’s consumer segment represents 15 percent of its total lending activities.

“We hope to double that this year,” the bank official added.

China Bank’s total resources currently stand at P177.41 billion, as total capital funds reached P26.8 billion while its capital adequacy ratio (CAR) improved further to 14.59 percent.

Interest income from loans grew 13 percent year on year.