China Bank earnings up 27%

Manila, Philippines -  China Banking Corp., a member of the SM Group, has reported a 27 percent increase in net earnings in the first three months of 2012 to P1.1 billion, from P866.98 million in the same period in 2011.

China Bank senior executive vice president and chief operating officer Ricardo R. Chua said, however, that the first quarter number “is not a good gauge of saying that the full-year income would stay the same.”

In 2011, the bank’s net income registered at P5.01 billion, or practically unchanged from the P5 billion recorded in 2010.

Chua said the bank is putting more emphasis on medium- to long-term growth with the developments in the past two years.

The bank’s network has grown to 293 branches including those of its subsidiary ChinaSavings Bank.

“More than the issue of income, our goal is to seize greater control over our capacity to service our bank clients,” the bank executive said.

He said China Bank not only intends to keep its present depositor base but also offer more products and better services to make banking easier and profitable.

It will likewise conduct aggressive recruitment as well as introduce more training programs to meet the growing demand for quality services, Chua added.

Last Thursday, the bank declared a 10-percent stock dividend and a P12 per share cash dividend worth a total P1.42 billion to holders of 117.99 million outstanding shares (before stock split). The stockholders likewise approved a 10-for-one stock split of the bank’s common shares to provide more domestic liquidity.

In his report to stakeholders, China Bank president and chief executive officer Peter S. Dee said that improvements in the bank’s core earnings allowed it to consistently declare annual dividends.

In 2011, it likewise paid P12 per share cash dividend worth P1.3 billion and a 10-percent stock dividend.

Meanwhile, China Bank’s customer loans portfolio stood at P154 billion by end-March 2012, a 34 percent growth, driven by higher bookings from retail, commercial and consumer borrowers.

“Despite the drop in lending rates, the higher loan volume boosted interest income from loans and receivables by 15 percent. Fee-based income improved by 166 percent due to hefty trading and foreign exchange gains. The improvement also came from higher contributions from trust operations (trust fees increased 25-percent from higher volume of trust assets) and the sale of acquired assets,” Dee said.

Tighter monitoring of loans quality led to a drop in non-performing loans (NPLs) by P737 million, reducing its NPL ratio to 2.8 percent.

China Bank also booked an additional P100 million in provisions for probable loan losses, bringing up its loan loss coverage ratio to 148.72 percent. Thus, its loans-to-deposits ratio stood at 67.22 percent.

Total resources stood at P272 billion, up 14 percent from the same period last year. Total deposits likewise grew 14 percent to P222 billion with total low cost deposits at P81 billion.