China Bank to raise up to P100 B in 3 years

Published March 4, 2021, 4:45 PM

by James A. Loyola

China Banking Corporation (China Bank) is planning to raise up to P100 billion over the next three years to support its strategic initiatives and expansion program.

In a disclosure to the Philippine Stock Exchange, the bank said its Board of Directors has greenlighted the conduct of a fundraising exercise of up to P100 billion in several tranches.

The fundraisers may be in the form of Retail Bonds or Commercial Papers, or a combination of both.

China Bank said this exercise is also in line with the Bank’s intention to be an active participant in the country’s economic recovery and expansion.

The bank reported a 20 percent growth in net income to P12.1 billion despite the challenges posed by the pandemic last year.

China Bank said its bigger profits translated to an improved return on equity of 12.1 percent from 11.0 percent, and a better return on assets of 1.2 percent from 1.1 percent. 

The strong growth in core businesses and better investment and trading returns offset the Bank’s pandemic-related loan buffer of P8.9 billion, which was 3.5 times higher than in 2019.

Net interest income rose by 30 percent to P33.8 billion on the back of a 39 percent drop in interest expense, resulting in higher net interest margin of 3.92 percent.

Non-interest income grew by 19 percent to P10.0 billion, lifted by trading and securities gains which expanded more than double to P5.4 billion in 2020. 

Sustained efforts in cost management kept the growth of operating expenses controlled at 6 percent to P21.5 billion. Cost-to-income ratio improved to 49 percent from 59 percent as income growth continued to outpace expense growth. 

“Going into the crisis, China Bank was operationally and financially sound, but what enabled us to remain resilient and to sustain our growth momentum was our employees who went above and beyond in 2020,” said China Bank President William C. Whang.

He added that, “Our relentless efforts to build and maintain robust liquidity and capital levels have positioned the Bank well to weather the ongoing storm, and at the same time, to help our customers and the country recover.”

China Bank’s total assets stood at P1.04 trillion, up 8 percent. 

Deposits increased by 8 percent to P835 billion, underpinned by 14 percent growth in checking and savings accounts (CASA). Healthy CASA deposit generation eased the Bank’s overall funding cost and led to a better CASA ratio of 56 percent.