China Bank net income up 63%

MANILA, Philippines - China Banking Corp., a commercial bank controlled by the family of retail tycoon Henry Sy,  posted a net income of P1.79 billion in the first quarter, up 63 percent from P1.1 billion in same period last year.

China Bank, senior vice president Alexander Escucha, in an interview on the sidelines of the bank’s stockholders meeting, said the substantial increase in earnings for the first three months was brought about by the higher gains from trading and fee-based transactions.

The bank’s gross revenues, Escucha said, increased 24.7 percent, driven by trading and securities gains – which expanded 80.7 percent year-on-year – and higher fee-based revenues.

Customer loan portfolio expanded 16.3 percent to P179.5 billion year-on-year with all market sectors showing significant growth.

Interest revenues from loans and receivables increased 14.8 percent. Overall net interest income grew to P2.1 billion, an improvement of 7.5 percent year-on-year.

At the stockholders’ meeting, China Bank announced a 10 percent stock and a 12 percent (P1.20) per share cash dividend, for a total of P1.56 billion, subject to approval by the Bangko Sentral ng Pilipinas, the Securities and Exchange Commission and the Philippine Stock Exchange.

The cash dividend represents 31 percent of the 2012 net income of P5.03 billion, with a cash dividend yield of 1.7 percent based on China Bank’s latest share price of P69.10.

The improved earnings translate to a robust 16.44 percent return on equity and a 2.19 percent return on assets.

Despite the ongoing branch and ATM network expansion and investments in new technology, China Bank’s operating expense growth was controlled at 16 percent.

Cost efficiency improved to 54.4 percent from 60.2 percent.

Meanwhile, Escucha said the bank is on track with its expansion plan, opening 23 new branches last year - 15 for the main bank and eight for China Bank Savings (CBS) – and acquiring Unity Bank, a Pampanga-based rural bank, to be merged with CBS by the second half of 2013.

This year, the target is to open a total of 67 branches.  Three CBS branches were opened in the first quarter, bringing the total branch count to 320 to date, including the new China Bank branch opened last April 26.

The bank is also implementing a new core banking system for roll-out by next year.

Total resources grew 22 percent year-on-year to P331.6 billion. Total deposits expanded by 22.2 percent to P271.5 billion, with total low cost deposits at P94 billion, up 14.4 percent.

Tighter monitoring of loans quality led to a drop in gross non-performing loans by P465.75 million, reducing the bank’s non-performing loans ratio (gross) to 2.8 percent.

The bank set aside P71.38 million for probable loan losses, translating to a loan loss coverage ratio of 136.6 percent.

China Bank’s financial position remains solid. Total capital reached P46.36 billion, equivalent to a tier 1 capital adequacy ratio of 15.8 percent – still one of the strongest in the industry.

At the same stockholders’ meeting, Hans T. Sy and Gilbert U. Dee were re-elected chairman and vice chairman of the board, respectively. The following directors were also re-elected to the China Bank board: Peter S. Dee, president and CEO; Ricardo R. Chua, senior executive vice president and COO; Joaquin T. Dee; Harley T. Sy; Herbert T. Sy; Jose T. Sio; independent directors Dy Tiong, Alberto S. Yao, and Robert F. Kuan; Henry Sy, Sr. remained honorary chairman and advisor to the board.

China Bank, established in 1920, is the first privately-owned commercial bank in the Philippines. It is likewise the first bank in Southeast Asia to process deposit accounts online in 1969 and the first Philippine bank to offer phone banking in 1988.

China Bank and its thrift bank arm, CBS, provide a wide range of banking services through a combined network of over 300 branches and 500 ATMs nationwide.