China Banking Corp. (China Bank, PSE: CHIB) has reported 2010 audited net income of PhP5 billion, an increase of 22%, driven by revenues from continued loans growth and improved trading gains. Fee-based businesses such as bancassurance, private banking, cash management and remittances also contributed to the earnings growth.
China Bank’s 2010 financial ratios underscore its sustained profitability in 2010: return on equity of 16.69% from 15.36%, return on assets of 2.15% from 1.9%.
“2010 was a year of dynamic growth for China Bank. We continued to pursue our aggressive expansion program – branch openings, ATMs – and even exceeded our income target of PhP4.4 billion,” said China Bank President and Chief Executive Officer Peter S. Dee.
The Bank’s total revenues grew to PhP17.89 billion. Net interest income improved by 4.8% to PhP8.63 billion as interest expense decreased by 11.5% due to lower borrowing rates. Fee-based income increased by 14% to PhP4.68 billion, boosted by higher trading gains, which grew 47.4% to PhP1.75 billion.
Even as its branch expansion program was in full swing, prudent expense management kept operating expense growth to 2.48%. China Bank continued to be one of the most cost-efficient banks in the industry with a cost efficiency ratio of 53.5% from 56.3%.
Total assets grew 10% to PhP257.47 billion. Gross loan portfolio from customers expanded by 10.6% to PhP113.7 billion due to higher corporate borrowings, bringing the ratio of net loans to total assets to 40.9% in 2010, up from 40.4% in 2009. With adequate provisions for probable losses already in the books, China Bank reduced its loan-loss provisions by 37.4% to PhP496 million. Still, the Bank’s loan loss coverage ratio remains to be among the highest at 128.7%
Low cost funding improved by 22.5% as checking and savings accounts (CASA) deposits continued to build up in 2010, reaching PhP71.82 billion. Total deposits grew 10.2% to PhP213.04 billion. The share of CASA to total peso deposits improved to 44.8% from 41.6%.
China Bank’s financial position remains solid with total capital funds of PhP35.45 billion, up by PhP5.09 billion. This translates to a capital adequacy ratio of 16.26%, still one of the strongest in the industry.