China Banking Corporation posted a 35 percent growth in consolidated net income to P11.2 billion for the January to September 2021 period on the back of sustained core business growth and effective cost management.

In a disclosure to the Philippine Stock Exchange, the bank said it was able to ride out the economic headwinds, recording quarterly income growth since the start of the COVID-19 pandemic.

In the third quarter alone, China Bank saw its net earnings grow 29 percent to P3.9 billion versus the third quarter of 2020.

The strong performance in the first nine months of 2021 translated to a higher return on equity of 13.6 percent and an improved return on assets of 1.5 percent.

Net interest income rose 13 percent to P28.2 billion as interest expense dropped by 48% with the growing share of customer deposits in current and savings accounts (CASA). Net interest margin improved to 4.2 percent.

Credit provisions of P6.5 billion were relatively flat versus last year.

Meanwhile, fee-based income grew 19 percent to P8.4 billion, underpinned by a 40 percentuptick in core fee-based earnings to P4.4 billion from service charges, fees and commissions, forex gains, income from acquired assets, trust, and bancassurance operations.

Operating expenses slightly increased mainly from overhead costs, but the Bank continued to improve its cost efficiency, recording a better cost-to-income ratio of 45 percent.

“These results exceeded our expectations,” said China Bank President William C. Whang.

He added that, “We will continue to support our customers, especially those who are still struggling amid the global pandemic, as we push for greater efficiencies and sustainable growth through digitalization and optimization of our branch and ATM networks.”

China Bank maintained its balance sheet strength, with P1.0 trillion in assets, up 4 percent.

With the gradual return of business activities, gross loans expanded 3 percent to P612 billion.

Gross non-performing loan (NPL) ratio was at 3.4 percent, lower compared with the Bank’s June level and the industry average for the period. The higher credit buffers resulted in an NPL cover of 106 percent.

On the funding side, total deposits rose 3 percent to P849 billion, underpinned by a 23 percent increase in CASA.

“China Bank’s sustainable funding sources and strong capital continue to be key strengths,” said China Bank Chief Finance Officer Patrick. D. Cheng.

He noted that, “About 62 percent of the Bank’s P849 billion total deposits were accounted for by CASA, up from 52 percent last year, and this helped bring down our overall funding cost. Our healthy capital ratios also reflect the Bank’s financial soundness.”

Total capital funds stood at P114 billion, up 13 percent, for a common equity tier 1 (CET1) ratio of 14.4 percent and a total capital adequacy ratio (CAR) of 15.3 percent.