By James A. Loyola
China Banking Corporation (China Bank) reported a 19 percent improvement in net income to ₱2.2 billion in the first quarter of 2020, driven by the sustained growth of its core businesses amid the Luzon-wide enhanced community quarantine (ECQ).
In a disclosure to the Philippine Stock Exchange, the bank said its total operating income rose 26 percent year-on-year to ₱9.1 billion.
Net interest income grew 34 percent to ₱7.9 billion on the back of higher revenues from earning assets and lower interest expense, which dropped 23 percent. Net interest margin improved to 3.82 percent from 3.32 percent.
Weaker market conditions impacted the Bank’s trading activities and led to a lower fee income of ₱1.2 billion.
Operating expenses increased 22 percent to ₱5.8 billion as the Bank continued to strengthen and expand its operations and provided for COVID-19-related expenses. Nevertheless, cost-to-income ratio improved to 64 percent from 66 percent in the same period last year.
Despite the scaled-down branch operations in Metro Manila and the rest of Luzon starting mid-March, total assets expanded 10 percent to ₱984 billion.
Gross loans grew 15 percent to ₱592 billion, driven by strong demand across all customer segments. On the funding side, deposits rose 9 percent to ₱785 billion. Loans to deposits ratio improved to 74 percent.
China Bank’s non-performing loan (NPL) ratio remained stable at 1.7 percent. The Bank increased provisions by 51 percent in anticipation of possible higher credit losses in the face of the ongoing COVID-19 pandemic. NPL cover was at 109 percent.
The Bank’s total capital stood at ₱97 billion, with regulatory capital ratios well above regulatory levels.
“The impact of the COVID-19 pandemic on our customers, employees, and society as a whole is a great concern for China Bank. We are committed to extend the help, support, and flexibility that our stakeholders need in these challenging times to ease the negative economic consequences of this global health crisis,” said China Bank President William C. Whang.
He added that, “We are also very grateful to our hardworking and dedicated frontliners who enable us to deliver on this vital commitment.”