China Bank earnings inch up on higher net interest income

CHINA BANKING Corp.’s net income rose by 3% last quarter from a year earlier amid an expanding asset base, higher net interest income and lower credit provisions.

In a statement to the Philippine Stock Exchange, the Sy-led bank said earnings stood at P5 billion, higher than P4.9 billion a year earlier. “This translated to a return on equity of 14.7% and return on assets of 1.5%.”

Net interest income rose by 18% to P12.7 billion after a 46% increase in revenues to P18.4 billion, building up the lender’s earning asset.

Operating expenses, excluding loss provisions, rose by 19% to P6.8 billion due to higher volume-related taxes.

“Core operating expense growth was also modest, with the bank’s continued investments in digital transformation and human resource development,” the publicly listed lender said.

“The bank continues to do well amidst the challenging operating environment, reflecting the quality of our balance sheet, our prudent management and the strength of our core businesses,” China Bank President and Chief Executive Officer Romeo D. Uyan, Jr. said in the statement.

“We are off to a good start as our strong capital position and solid liquidity allow us to play a major role in the reopening and growth of the Philippine economy,” he added.

As a result, the bank’s net interest margin fell to 4.2% from 4.3%, while its cost-to-income ratio rose to 52% from 46%. Total assets grew by 20% year on year to P1.352 trillion.

China Bank said net loans had increased by 15% to P709 billion due to a 13% and 23% expansion in business and consumer loans.

“The bank’s thrift banking arm, China Bank Savings, sustained robust growth in retail loans, with its personal loans doubling year on year to account for almost a third of total consumer business,” the lender said.

The bank’s credit provisions dropped by 44% to P440 million.

The bank booked a bad loan ratio 2.3% and a coverage ratio of 118%, lower than 2.4% and 121%, respectively.

Total deposits grew by 24% to P1.086 trillion, reflecting the bank’s solid customer relationships.

“We sustained the strong momentum in loans and deposits, outpacing the industry average and reflecting the successful execution of our strategy to strengthen our core businesses, effectively manage resources, and prudently reduce risks,” China Bank Chief Financial Officer Patrick D. Cheng said in the same statement.

Total capital rose by 11% to P139 billion.

As a result, the bank’s common equity tier 1 ratio stood at 15.4%, lower than 15.5% a year earlier. Its capital adequacy ratio was steady at 16.3%.

The bank said at its annual stockholder’s meeting on April 20 stockholders on record as of May 5 would be paid a cash dividend of P1.90 a share.

“The cash dividends, totalling P5.1 billion, are 27% higher compared with the P4 billion paid last year,” China Bank said.

China Bank shares rose by 0.31% or 10 centavos to close at P32.30 each. — Aaron Michael C. Sy