China Bank net income grows 11.4% to P2.36B in first half

MANILA, Philippines - China Banking Corp. posted a double-digit growth in net income in the first semester of 2011 as all revenue sources improved, the bank said in a statement.

From P2.11 billion in the semester of 2010, net earnings expanded 11.4 percent to P2.36 billion, it said.

“This strong performance, which translates to a return on equity of 14.9 percent and return on assets of two percent, was driven by improvements in the bank’s core operations – higher net interest income, trading gains, and loans and trust volume – as well as increased contributions from new revenue streams such as bancassurance,” Peter S. Dee, China Bank president and chief executive officer, said in a report.

In the second quarter alone, China Bank posted a P1.48-billion profit, a hefty 35.6 percent increase from P1.05 billion in the same period in 2010.

Net interest income rose 4.3 percent to P4.41 billion, despite low interest rates from very liquid market conditions.

Gross loans expanded 20.1 percent to P124.46 billion as lending to corporate and commercial accounts increased. Net interest margin remained at a healthy four percent.

Total trading gains also grew 30.8 percent to P459 million as market conditions improved in the second quarter.

Other income reached P1.60 billion due to higher earnings from trust operations, which grew 26.1 percent to P266 million, and miscellaneous income, which improved 86.1 percent to P255 million, from significant growth in the bancassurance business.

Total revenues dipped 2.8 percent to P7.94 billion but the gains were offset by tighter expense management in the face of continued branch expansion.

Total expenses decreased 7.7 percent to P5.59 billion, translating to a cost efficiency ratio of 53.5 percent, one of the best in the industry.