Business

China Bank 1H 2015 Net Profits Up 14% to PhP2.51B

Makati—(PHStocks)—China Banking Corp. (PSE: CHIB) posted a 14% increase in consolidated profits for the first semester to PhP2.51 billion from PhP2.2 billion for the same period last year, as the bank sustained the strong growth in its core businesses. This translates to a return on equity (ROE) of 8.67% and a return on assets (ROA) of 1.06%.

Net interest income is up 9% to PhP7.42 billion on the back of higher loans volume and lower interest expense, which dropped 9% to PhP2.06 billion. This resulted in an improved net interest margin of 3.36% for the first six months. Meanwhile, non-interest income is up 4% to PhP2.05 billion from higher trading gains and fees & commissions.

Total assets increased 5% year-on-year to PhP479.29 billion, driven by loans and deposit growth. Net loans expanded 10% year-on-year to PhP289.32 billion, underpinned by a 26% increase in consumer loans. As total deposit growth remained steady at 3%, the bank’s CASA (checking and savings accounts) level rose 14% to PhP202.5 billion and replaced a significant block of high cost funding, thus improving the funding mix and reducing interest expense by PhP210 million. The CASA to total deposits ratio stood at 50.7% versus 45.63% year-on-year, while the loans to deposit ratio was at 72.43% from 68.11%.

The bank’s income before tax reached PhP3.2 billion, up 11%. Operating income grew 8% to PhP9.47 billion. Even as the bank pursued its expansion plans, the increase in operating expenses (excluding loan-loss provision) was controlled at 6% to PhP6.01 billion, reflecting the bank’s effective cost management that led to an improved cost efficiency ratio of 63.46% from 65.01%.

With the sustained expansion of its loan portfolio, China Bank increased its provision for credit losses by 37% to PhP255.59 million.

Total capital funds rose 6% to PhP58.81 billion. The bank’s CET 1/ Tier 1 and total capital adequacy ratios stood at 13.58% and 14.49%, respectively.

Recently, the bank returned to the offshore markets, securing a $158 million syndicated 3-year term loan. Global credit rating agency Fitch affirmed the Bank’s long-term foreign and local currency Issuer Default Rating (IDRs) at ‘BB’, with a stable outlook. And as China Bank celebrates its 95th year this month, it is switching to a new and more powerful core banking system and is launching China Bank MasterCard which comes in three variants: Prime, Platinum, and World.

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