China Bank earnings up 25% to P3.93B

MANILA, Philippines - China Banking Corp., a member of the SM Group of Companies, has posted P3.93 billion in consolidated net income in the first nine months of 2013, up 25 percent from P3.14 billion in the same period last year due to higher revenues from loans and investments.

The bank also attributed the improved earnings to revenues from heightened banking activities, bancassurance and sale of acquired assets.

The end-September income translates to a return on average equity of 11.78 percent and return on average assets of 1.55 percent.

Total operating income for the period likewise grew 18 percent to P11.47 billion compared to a year earlier as net interest income and fee and commission income improved.

Net interest income jumped 17.6 percent to P7.08 billion at the end of the third quarter, driven by higher earnings from loans and an expanded low cost deposit base.

Non-interest income rose 18.6 percent to P4.38 billion as the bank recorded higher trading gains, which grew 11.8 percent to P1.92 billion.

Operating expenses increased but were maintained at a manageable level at 12.4 percent increase despite the bank’s continued network expansion and technology upgrades both for the main bank and the savings bank.

The bank’s asset base expanded to P359.03 billion, up 15 percent year-on-year.

The bank’s gross loan portfolio went up 14 percent to P210.61 billion in the first nine months from P184.74 billion in the same period last year, driven by higher demand from all customer segments: consumer, commercial, and corporate.

Non-performing loans (NPL) ratio was contained at 2.4 percent at the end of September 2013.

Provisions for probable losses stood at P314.36 million, up 104 percent, bringing the bank’s loan loss coverage to 139 percent.

Total deposits rose 16 percent to P303.24 billion, with CASA deposits growing a hefty 50.8 percent to P126.55 billion.

The overall funding mix improved as the low cost-to-total peso deposits ratio for the first nine months of 2013 stood at 53 percent versus 41 percent for the same period last year.

Loan-to-deposit ratio was maintained at 68 percent. China Bank’s capital adequacy ratio (CAR) and Tier 1 capital ratio stood at 16.71 percent and 15.83 percent, respectively—well above the regulatory minimum and the Basel III requirements set for implementation next year.

“We are pleased with the strong underlying growth in our core businesses and the continued success of our other revenue streams. These numbers are on track with our growth targets for the year,” China Bank president and CEO Peter Dee said.