China Banking Corporation (China Bank) reported a 20 percent growth in net income to P12.1 billion despite the challenges posed by the pandemic last year.

In a disclosure to the Philippine Stock Exchange, the 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.

The Bank’s successful fund raising via the issuance of P15 billion fixed-rate bonds in October 2020 also helped improve funding flexibility.

This was followed by another oversubscribed bond offering worth P20 billion, issued and listed last February 18, 2021.

Gross loans ended flat at P572 billion as business customers reduced loan drawdown. Consumer loans grew 7 percent, accounting for 20 percent of the total loan portfolio.

Non-performing loans ratio rose to 2.3 percent, in line with the Bank’s expectations, but NPL cover remained sufficient at 128 percent.

“We continue to support our customers through the uncertainty of COVID-19, providing credit, debt relief, and payment moratorium while ensuring capital and liquidity preservation. We have formulated strategies to mitigate asset quality issues given the possibility of a drawn out pandemic,” said China Bank Chief Finance Officer Patrick D. Cheng.