China Bank Savings Inc., the thrift retail banking arm of Sy-led China Banking Corp., plans to push forward with its brick-and-mortar expansion, leaning on wider consumer margins to buffer against persistent inflation and elevated global interest rates.

James Christian Dee, CBS president, said the savings bank aims to open 15 new branches annually over the next five years, targeting a total footprint of 220 locations within the next two to three years.

Each new branch requires an average capital expenditure of ₱9 million to ₱10 million, while converting existing “branch-lite” units costs roughly half that amount. CBS expects its current pace of internal income generation to fully sustain the capital rollout.

“The operating environment is certainly more challenging today with slower growth, higher inflation, and continued global uncertainty,” Dee said during the company’s annual stockholders’ meeting. “That said, we remain cautiously optimistic. Our first-quarter performance was in line with expectations. Asset quality remains healthy and deposits continue to grow.”

To insulate its balance sheet from systemic shocks, the lender is doubling its credit provisions compared to last year. The aggressive provisioning comes despite cooling of certain geopolitical risks, such as the signing of a peace accord between the United States (US) and Iran.

A 20 percent to 30 percent surge in top-line revenues year-on-year has given the bank the necessary financial cushion to absorb the heavier credit buffers, Dee said, adding that the conservative stance will remain in place for the next few months while management monitors economic indicators.

The lender’s focus on the retail segment and small and medium enterprises provides an inherent defensive shield against global interest rate volatility, according to the CBS executives. Middle East conflicts and subsequent macroeconomic ripple effects are widely expected to keep borrowing costs elevated across emerging markets.

“Our margins are bigger in the consumer market,” CBS Chairman Ricardo Chua said. “So, if we are very careful in the way we handle bad loans and ensure we do not accumulate a big chunk of those, then we should be able to protect the average yield.”

The expansion strategy relies heavily on localized physical touchpoints to acquire lower-cost deposits. So far this year, the bank has opened five standard branches and upgraded 10 branch-lite units.

“While we remain mindful of the risks, we believe the bank is well-positioned to navigate the current environment and continue to grow responsibly,” Dee said.