Makati—(PHStocks)—China Banking Corporation (China Bank, PSE: CHIB), the country’s first privately-owned commercial bank, posted an audited consolidated net income of PhP5.03 billion for 2012, which translates to a return on equity of 12.39% and return on assets of 1.72%.
The robust income was fueled by a 29% increase in loans to PhP198 billion, which grew 50% faster than the industry. Lending vigorously grew across all market segments—up 36% in commercial, 28% in consumer and 27% in corporate loans—cushioning the impact of lower yields and thinning margins. Profits were also boosted by hefty trading and securities gains, expanding by 98.6% to PhP2.92 billion. The Bank also became more active in the investment banking arena with participation in numerous deals, most recently acting as the sole arranger for the $140 million Cebu-Pacific dollar-denominated term loan deal.
The Bank’s 2012 performance was underpinned by marked improvements in its balance sheet. Total assets increased by 23.4% to PhP323.65 billion, while total deposits improved by 25.8% to PhP271.98 billion. Close monitoring and tighter controls led to a 10.5% drop in the Bank’s non-performing loans (NPLs) to PhP5.03 billion, reducing its NPL ratio to 2.07% and improving its loan loss coverage ratio to 148.7%, one of the best in the industry.
The Bank maintained its solid financial position as capital funds increased to PhP42.29 billion, translating to a Tier 1 capital adequacy ratio of 15.15% (Total CAR of 16%). The Bank has consistently provided good returns to shareholders through cash and stock dividends. Last year, the Bank paid PhP12 per share and 10% stock dividends to holders of its 117.99 million outstanding shares (before stock split).
The Securities and Exchange Commission (SEC) approved in September 2012, a ten- for-one stock split of the Bank’s common shares. The Bank’s capital stock of PhP20 billion was divided by 2 billion shares with a par value of PhP10 each from the previous 200 million shares with par value of PhP100 each. The Bank’s new par value of PhP10 per share is now at par with other banks listed in the stock market.
Operating expenses were tightly managed even as the Bank’s expansion plan was accelerated by strategic investments in 2012, including the acquisition of Unity Bank, a Pampanga-based thrift bank, to be merged with its thrift bank arm, China Bank Savings.
China Bank’s branch network rose to 316 as fifteen branches for the main bank and eight for the savings bank were opened last year.
China Bank offers a wide range of financial products and services to over 300 branches nationwide (including branches of China Bank Savings) which it plans to expand to 400 by 2014. Complementing this vast branch network are convenient and secure electronic banking channels for day and night banking service: China Bank TellerCard ATM, ChinaBank Online (mobile and internet banking), and China Bank TellerPhone (phone banking).