By James A. Loyola
China Banking Corporation (China Bank) managed 2 percent growth in first quarter consolidated net income to P1.50 billion this year due to the sustained growth of its core businesses.
In a disclosure to the Philippine Stock Exchange,, the bank said its operating income increased 9 percent to P6.14 billion.
Net interest income rose 18 percent to P5.29 billion, driven by the 20 percent growth in gross loan portfolio.
Non-interest income (excluding trading gains) grew 6 percent to P1.14 billion from the increase in service charges, fees from investment banking, and income from foreign exchange gains.
Core recurring income (operating income excluding trading gains) was up 16 percent year-on-year to P6.44 billion from P5.55 billion.
As China Bank carried out its expansion program by investing in new branches, more people, and up-to-date technology to support the growth of new businesses, operating expenses increased 13 percent to P4.24 billion.
Total assets expanded 16 percent to P722.63 billion, which is P102.23 billion more than first quarter 2017 levels, driven mainly by the 20 percent growth in gross loan portfolio to P455.13 billion.
Growth was registered across all market segments: consumer, commercial, and corporate.
Non-performing loans dropped P1.31 billion, leading to an improved NPL ratio of 1.32 percent. The Bank’s loan loss coverage ratio reached an important milestone, jumping to 149 percent from 94 percent — better than the industry average of 121 percent.
The same ratio at the parent bank level was even stronger at 282 percent from 159 percent.
The growth was funded by sustained increase in deposits. Total deposits rose 16 percent to P613.64 billion, underpinned by a 24 percent growth in CASA (checking & savings accounts) deposits to P338.73 billion, reflecting the strength of the China Bank franchise.
CASA ratio also improved to 55 percent, while loans-to-deposit ratio stood at 73 percent.
“We are working hard to meet our goals for the year, focusing on sustainable earnings through our core businesses of loans and deposits and strengthening our fee-based revenue streams,” said China Bank President William C. Whang.
The bank declared P2.23 billion cash dividends (P0.83 per share), 12 percent higher than the previous year.
The cash dividends represent 30% of the full year 2017 net income of P7.52 billion, with a cash dividend yield of 2.38 percent based on China Bank’s closing price of P34.90 as of May 2, 2018.
Payment will be on June 1, 2018 to China Bank stockholders as of May 17, 2018.
“Our good results last year sustained our ability to provide satisfactory returns to our shareholders who have shown their full support during our stock rights offering in 2014 and 2017,” said Whang.