China Bank net income climbs 17% in 3rd quarter

CHINA BANKING Corp. (China Bank) posted a 17% increase in its net income in the third quarter, driven by higher revenues and core fee earnings.

The bank’s net income increased to P4.6 billion in the July to September period from P3.9 billion in the comparable year-ago period, it said in an e-mail on Thursday.

For the first nine months of the year, China Bank’s net profit rose 31% to P14.7 billion from the P11.2 billion seen in the same period in 2021.

This translated to a return on equity of 15.6%, up from 13.6% last year, and a return on assets of 1.6%, also higher than 2021’s 1.5%.

“This performance demonstrates our strong business franchise and focused growth strategy. We will continue to efficiently use our resources to fuel the bank’s growth, support our customers, and further drive economic recovery,” China Bank President William C. Whang said in a statement on Thursday.

Net interest income grew by 17% to P33.7 billion in the first nine months from P28.8 billion last year, driven by stronger revenues that offset higher interest expenses due to rising rates. As a result, the bank’s net interest margin was at 4.2% in the period.

Meanwhile, income from fees increased by 6% to P8.3 billion from P7.8 billion a year ago, supported by the sustained recovery in service charges, fees and commissions, sale of acquired assets, and bancassurance.

China Bank’s revenues in the nine-month period grew by 15% to P42 billion from P36.6 billion last year.

Meanwhile, operating expenses increased by 8% to P18 billion from P16.6 billion a year ago. The bank attributed this to rising inflation and a depreciating peso that pushed up transaction-related costs and spending in technology.

The bank recorded a cost-to-income ratio of 43%, down from 45% a year prior.

China Bank’s loan portfolio expanded by 14% to P676 billion as of September from P592 billion last year on the back of stronger demand for corporate and consumer credit.

Its gross nonperforming loan (NPL) ratio was at 2%, 140 basis points lower than last year’s 3.4%. NPL cover stood at 161%, up from 106% last year and well above the industry average.

Even as its gross NPL ratio eased, the lender hiked its credit provisions by 7% to P6.9 billion.

“While there is continuous demand for loans, growth for the third quarter has been more measured in the light of current macroeconomic conditions,” China Bank Chief Finance Officer Patrick D. Cheng.

On the funding side, total deposits grew by 18% to P1.001 trillion from P849 billion in September 2021 amid a 10% increase in current and savings accounts.

As of September, China Bank’s consolidated assets stood at P1.274 trillion, 21% higher than the P1.055 trillion in the same period in 2021.

Total equity jumped by 16% to P133 billion, with the bank posting a common equity Tier 1 ratio of 14.9% and a capital adequacy ratio of 15.7%, both above the regulatory minimum.

China Bank shares declined by 40 centavos or 1.51% to close at P26.10 each on Thursday. — Keisha B. Ta-asan